A HELOC stands for Home Equity Line of Credit. This line of credit loan is based on the equity you have built in your home. In other words, it’s the difference between what you have left to pay for your home and what it is worth.
Review the Following Example to Understand Your Home’s Equity:
VALUE OF YOUR HOME: $250,000
AMOUNT OWED ON HOME: $200,000
EQUITY: $ 50,000
In the above example, you owe $200,000 on your home but it appraises at $250,000. This means you have $50,000 of equity in your home. You are able to borrow this equity with a HELOC. However, you may not be able to borrow all $50,000 of your equity. Other credit factors and lender limits are included to determine the exact borrowed amount.
Using My Home’s Equity
Once you obtain a HELOC, you can use the credit line for just about anything. For example, if you’ve been dreaming about adding a pool or even updating your kitchen, a HELOC could easily fund those projects. Plus, many times these renovations could increase the value of your home.
You are even able to use the equity to consolidate those high-interest credit cards you’ve accrued or even pay for your child’s education. The options are endless.
HELOC vs Home Equity Loan
A HELOC is a line of credit; meaning you have access to your funds as you need them. With a HELOC, you only pay back what you use of your line of credit.
With a Home Equity Loan, you’ll receive the full loan amount up front in one lump sum and you’ll have fixed monthly payments.
Both options offer different benefits. For example, if you have on-going repairs or expenses, the convenience of borrowing as needed with a HELOC may be the best option. If you are putting in a new pool and know the upfront cost, a lump sum Home Equity Loan may work best.
Getting Started
Stop by any branch location, give us a call at 813.264.4969 | 800.782.4899 or visit us online to learn more about our HELOCs. If you have any questions, please contact us – our Home Loan Experts are ready to help!
This article is for educational purposes only. Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed.