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Tap into your home equity without affecting your first mortgage. Pull money out as you need for home improvements, debt consolidation, and more.
There are plenty of times that you need to tap into your home’s equity. Many homeowners have a rate in the 3s or 4s. A HELOC lets you tap into equity while keeping your first mortgage, you can pull money out for nearly any purpose: consolidate other debt, make home improvements, purchase other property, and more.
Use home equity to accomplish financial goals.
Borrow and pay back as many times as you’d like during the draw period.
HELOCs come with much lower closing costs compared to a traditional refi.
A home equity line is the perfect tool for today’s homeowner. A traditional cash-out refinance is one way to access your home equity, but you lose your low first mortgage rate. A HELOC, though, does not affect your first mortgage in any way. As home values rise, a HELOC is a fast, inexpensive way to tap into the massive equity that many homeowners are building.
You take out a line of credit that is attached to your home. The amount is based on your needs and the amount of equity in the home. After closing, you can use that cash for any purpose. Pay it back and re-borrow funds as needed.
HELOC rates are based on the current prime rate, which is easily found online. Your HELOC rate will be prime plus or minus a certain amount. For example, if the prime rate were 8.5% and your HELOC rate were prime + 0.50%, your rate would be 9.0%. Keep in mind that HELOC rates can fluctuate since they are tied to prime, and prime is tied to the federal funds rate which is set by the Federal Reserve.
As an example, someone with a $50,000 HELOC with a rate of prime + 0% might have a rate of 8.5%. You have an interest-only payment, meaning you only owe interest on what is borrowed at the time. The monthly payment would be $354 per month ($50,000 X 8.5% / 12).
HELOC closing costs are very low. Some lenders even offer no-closing-cost HELOCs. Other lenders may charge fees to cover an appraisal (if one is needed) and recording fees. Talk to your HELOC lender about their costs.
