What is a Home Equity Line of Credit?

With a HELOC, you borrow against your equity, which is the home’s value minus the amount you owe on the primary mortgage. You can also get a HELOC if you own your home outright, in which case the HELOC is the primary mortgage rather than a second one.

How a HELOC works

HELOCs are tied to the PRIME rate index and therefore, have adjustable interest rates. This means that as the Federal Funds Rate goes up or down, the interest rate on your HELOC will adjust, too.

To set your rate, the lender will start with an index rate, then add a markup depending on your credit profile, loan-to-value and transaction type. That markup is called the margin, and you should ask to see the amount before you sign off on the HELOC.

Is getting a HELOC a good idea?

Whether a home equity line of credit is a good idea really comes down to your goals and financial situation. A HELOC is often used for home repairs and renovations, which can increase your home’s value. In general, a HELOC has a much lower interest rate than a credit card.

Some use home equity lines of credit to pay for education, but you may get better rates using federal student loans. Financial advisors generally don’t recommend using a HELOC to pay for vacations and cars because those expenditures don’t build wealth.

To apply we need an application: Fill Out Here

Once the application is completed you will receive a link to upload:

• Current mortgage statement
• Proof of Insurance
• 2 years tax returns
• 2 years W2
• 1-month paystubs

Home Equity Line Of Credit Basics