Do you know that most Americans have more equity in their home than they think? According to Corelogic’s most recent Homeowner Equity Insights Report, US homeowners with a mortgage gained an average of just over $16,000 or about 12% and home equity from 2017 to 2018. That’s a lot of money just sitting there waiting to be used, whether it’s for remodeling, college tuition, or just to pay off some bills. So, one way to tap into that equity is through a home equity line of credit or a HELOC.
With this type of loan, you can borrow as much of your available equity as you want during an initial draw., Typically around 10 years. You do make payments but they may be interested only, so it’s important to understand all of the conditions and terms of your HELOC. During the repayment phase, these payments include principal and interest and payments may be drastically larger than your draw. Payments, a shock for many if you’re not ready for it.
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What is a HELOC – a line of credit secured by your home equity.
What is the difference between a HELOC and a home equity loan? – He locks provide revolving credit whereas a home equity loan is one large sum.
How do I know how much equity I have? – Subtract your mortgage balance from your current home value, which can be determined by comparables or a professional appraisal.
How much equity do I need for a HELOC? – Typically more than 20%.
How much can I borrow with a HELOC? – About 80% of your home’s value.
How much does a HELOC cost? Costs that vary by lender, so it’s important to shop around for interest rates, fees, and any additional costs.
How do I get the funds? – Funds are provided via checking account, online transfer, or even a credit card.
How do I get the best rate? – It’s important to get at least three quotes from different lenders such as credit unions, banks, or mortgage officers like ourselves, who have access to hundreds of different options.
Is a HELOC tax-deductible? Yes, if used to build, buy, or improve the asset (your home).
Does a HELOC affect my mortgage? – Nobody could prevent you from refinancing until the HELOC is paid off.
Can you refinance a HELOC? – Yes, but there could be repayment or cancellation penalties, so again, it’s important to know all of the details.
He locks might be a great option, and they may be less expensive and less of a hassle than a complete refinancing, but you will now have two payments toward your home rather than just one mortgage payment. To find out if a HELOC is the best option for you, give us a call to find out your rates and terms and will weigh the cost between this, a home equity loan and a refinance to find out the best option for your needs and your budget. – Sourced from NerdWallet