Home Equity Line of Credit (HELOC)

The changes in the mortgage industry have caused this aspect of mortgage lending to change dramatically, making equity lending somewhat scarce. We encourage you to reach out to your mortgage provider to determine what lending options may be available to you. Please know that equity lending guidelines change constantly. Below is a brief overview:

An equity loan comes in two forms: a Home Equity Loan and a Home Equity Lines of Credit (HELOC). Both products are second mortgages, which are secured by your home. This lien is in addition to your current first mortgage.

Popular uses for a home equity loan are:

  • Home improvements, repairs and renovations
  • Purchasing of an auto, boat, or recreational vehicle
  • Vacation
  • Debt consolidation
  • College or Private School tuition

A distinguishing difference between the two is that a home equity loan is usually a fixed rate for a set period of time like 10, 15, or 30 years. If you prefer the stability of a fixed payment, rate and term, you may want to consider this type of loan. After you are approved, you will receive the total amount of your loan at one time.

A distinguishing difference between the two is that a home equity loan is usually a fixed rate for a set period of time like 10, 15, or 30 years. If you prefer the stability of a fixed payment, rate and term, you may want to consider this type of loan. After you are approved, you will receive the total amount of your loan at one time. A HELOC is usually an adjustable rate loan that changes as Prime Rate increases and decreases. It is still secured by your home and has the tax benefits of a second mortgage, but you only take the money when you need it. (It is similar to a “credit card”.) Once your line of credit is approved, you may withdraw funds for several years. A HELOC is easy to manage and your payments are flexible. You can make regular payments or pay it back in a lump sum, and your credit line will still be available the next time you need it.

The equity you have in your home is the amount of your home’s appraised value, minus your mortgage loan amount. For example, let’s say your home is worth $200,000, but you have a $100,000 mortgage loan. Your home equity is approximately $100,000. Your estimated available borrowing power on a HELOC or Home Equity Loan will vary based on credit score, job stability, property condition, and other existing financial obligations.

Home equity rates and terms vary depending on many factors, so we recommend that you contact your Mortgage Provider to see about program availability.