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A Home Equity Line Of Credit or HELOC is the best way to get cash for your needs, no matter if you are trying to consolidate your debts like medical or major expenses such as credit cards, or wanting to do work on your home. In past years, this kind of lending has declined, but recently lenders are seeing an increase in applications for HELOCs from lenders. For people who own their own home and are trying to restructure their finances, a great option would be a HELOC. The following is what you should know prior to considering a HELOC.
What is a HELOC?
HELOCs are similar to taking a second mortgage on your home, but you do not need to have an existing first mortgage to get a HELOC; a HELOC can either be a first or second mortgage. If you want to have access to funds that are needed and save money without having to rely on expensive credit cards, a HELOC is the perfect way. If you want to get a HELOC, just fill out an application with a lender that you choose, use your home’s equity as collateral, and the lender approves the loan for a certain amount. But, a HELOC is different from a traditional mortgage in that the lender will not advance the whole amount of the loan when the loan is made. It works similar to a credit card, in that you can take advances on the loan when you need funds.
Usually, you would do this with checks you will write to yourself and deposit into your bank. Upon doing this, the check amount is added to your loan amount. HELOCs are like a traditional mortgage in that you have to make monthly payments on the loan. Your lender will give you between five and ten years to draw from the loan, during this time you will only be required to pay interest on a monthly basis. Interest payments will fluctuate and will depend on several factors. Once the drawing period is over, you have to pay back the entire loan with monthly payments. The lender usually gives you between ten and twenty years to pay the loan back. HELOCs are great to pay for major bills and unexpected expenses.
Dual-Rate HELOC from Credit Unions
As previously mentioned, HELOC interest rates are calculated every day, and they will fluctuate based on many factors. Some banks give you access to a Dual-Rate HELOC loan. This loan will guarantee an interest rate that is fixed at only 2% for the first two years you have the loan. This introductory rate period will end and the standard low interest rates will apply. A lot of banks charge high interest rates and a lot of fees with HELOC products, whereas some banks have low interest rates and no closing costs on HELOCs in amounts up to $100,000. Some banks offer fast approvals, some within minutes.
HELOCs are a great option to get cash you need at a rate you can afford. For people who own their home and needs funds to update your home, pay medical bills, make home repairs, or pay college expenses, call your local credit union today and find out how they can help you reach your goals. Make sure to speak with a mortgage specialist in person to find out about all your borrowing options.
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Source by John Hirabayashi