HELOC | Home Equity Line of Credit

Home Equity Line of Credit:

• Close in 5 days
• No appraisal needed
• Minimum credit score of 620
• Up to 95% LTV (loan to value)
• 3 year draw or 10 year draw available
• Minimum loan amount of $50,000
• Maximum loan amount of $500,000

Property Type:

• Single Family
• 2-4 Units
• PUDs
• Modular homes
• Condo
• Townhouse
• Primary homes, Second homes and Investment homes

What is a HELOC (Home Equity Line of Credit)?

A Home Equity Line of Credit is a flexible financial instrument that allows homeowners to tap into the equity they’ve built up in their property. Unlike a traditional refinance loan, a Home Equity Line of Credit operates more like a credit card with a pre-approved limit.

How Does a HELOC Work?

1. Access to Equity: Home Equity Line of Credit grants you access to a line of credit based on a percentage of your home’s appraised value, minus the balance of your mortgage.
2. Withdraw Funds as Needed: You can withdraw funds from your HELOC whenever you need them, up to your credit limit, making it an excellent resource for various financial needs.
3. Interest Only on What You Use: Unlike a conventional loan where you pay interest on the entire borrowed amount, with a Home Equity Line of Credit, you only pay interest on the amount you’ve withdrawn.
4. Revolving Credit: As you pay back the borrowed amount, the credit becomes available again for future use, providing an ongoing financial safety net.

What are the Benefits of a HELOC?

Flexible Financing with a Home Equity Line of Credit

• With a HELOC, you have the freedom to use the funds for virtually anything, whether it’s home renovations, debt consolidation, education expenses, or unexpected medical bills.

Low-Interest Rates

• HELOCs typically offer lower interest rates compared to credit cards or personal loans, making it a cost-effective borrowing option.

* Remember: Interest rates are determined based on your credit.

Tax deductions with Home Equity Line of Credit

• In some cases, the interest paid on a Home Equity Line of Credit may be tax-deductible, potentially reducing your overall tax liability. However, it’s crucial to consult with a tax professional for specific guidance.

Using a Home Equity Line of Credit as an emergency fund

• A HELOC can serve as an emergency fund, providing quick access to funds when unexpected expenses arise.

Home Value Appreciation and Home Equity Line of Credit

As your home’s value appreciates over time, your available credit limit on the HELOC can also increase, offering even more financial flexibility.

Written by: Julia Luis, Loan Officer for Mortgage-World.com, LLC

Julia Luis covers mortgages and the housing market. Before joining Mortgage-World.com, she was a college student at the University of Miami.