What is a HELOC?
HELOC stands for home equity line of credit, or simply “home equity line.” It is a loan set up as a line of credit for some maximum draw, rather than for a fixed dollar amount. if(window.yzq_d==null)window.yzq_d=new Object(); window.yzq_d[‘slAxANG_fy0-‘]=’&U=12cjnh876%2fN%3dslAxANG_fy0-%2fC%3d-1%2fD%3dLREC%2fB%3d-1%2fV%3d0’; For example, using a standard mortgage you might borrow $150,000, which would be paid out in its entirety at closing. Using a HELOC instead, you receive the lenders promise to advance you up to $150,000, in an amount and at a time of your choosing. You can draw on the line by writing a check, using a special credit card, or in other ways. HELOCs are convenient for funding intermittent needs, such as paying off credit cards, making home improvements, or paying college tuition. You draw and pay interest on only what you need. Upfront costs are also relatively low. On a $150,000 standard loan, settlement costs may range from $ 2-5,000, unless the borrower pays an inte
Taking out a second mortgage or a refinance loan can be a great way to pull cash out of your home for new projects or financial ventures. There are all sorts of refinance loans available to those interested in taking advantage of their home equity. If you are looking to use your home as your piggy bank, one option you should consider is a Home Equity Line of Credit or HELOC loan. A traditional refinance mortgage loan allows you to take out a new loan that pays off your original mortgage, and if you so desire, you can make the new loan large enough to also pull out some cash for your personal needs. This money is usually given to you in one lump sum at the close of the loan. A HELOC loan, while still a type of refinance loan, acts more like a checking account. It is a line of credit meaning that the lender will determine with you the credit limit, which is based on the amount of your home equity. You will not receive a lump sum, but you will be able to withdraw money out of your HELOC w
HELOC, pronounced HEE-lock, is the financial industry’s abbreviation for Home Equity Line of Credit. A HELOC is a loan with a maximum amount based on the available equity in the borrower’s home. Equity is the difference between a home’s value and the full amount owed on the home. A HELOC is different from a home equity loan because a HELOC is a line of credit rather than an advancement of an entire sum all at once. There are both advantages and disadvantages to a HELOC. The biggest advantage most borrowers realize is the tax-deductible interest. In most cases, individuals who itemize when filing their federal income tax can deduct the annual interest paid on a HELOC. A HELOC is also not viewed by creditors the same way as a second mortgage in terms of overall debt. However, a HELOC is not advantageous in every circumstance. The disadvantages of a HELOC include variable interest rates, which are almost always the case. This means that in most situations, the interest rate attached to a
A Home Equity Line of Credit (HELOC) is a flexible line of against the value of your home – you use your home’s equity as collateral. Usually, the borrower agrees to a certain maximum amount they can borrow over a specified time period. In some ways it is similar to a credit card because the borrower has a credit limit, and can take out money as needed as long as they don’t exceed the amount of the HELOC.
