Do you have a home improvement project you need to get started, but don’t know where the money would come from? Maybe it’s a new car you’re after or consolidating some or all of your debt. Using the equity in your home may be the right solution for you to pay for these things, through a Home Equity Line of Credit or HELOC.
What is a HELOC?
Simply put, a Home Equity Line of Credit is a revolving line of credit that uses your home as collateral. Because you’re using your home as collateral, you will typically get better interest rates than other forms of credit. Unlike a Home Equity Loan, where you borrow a lump sum of money using the equity in your home, a HELOC can be used as needed.
How Does A HELOC Work?
Your home has value. In fact, it may be the biggest asset you have. The equity is the difference between your home’s value and the total amount you owe on your mortgage.
When you’re approved for a Home Equity Line of Credit, you’re given an amount of credit based on a percentage of your home’s equity. You can then borrow up to that amount of money, at any time. The HELOC advances can be made by transfer on your Carter on the Go App, Advance in a Branch or by Check You do not have to borrow the entire amount. For example, if your HELOC is for $85,000 and you need $5,000, you would only borrow the $5,000. You then have a set period of time to pay that $5,000 back. You would also have the other $80,000 available to you, should the need arise.
It’s important to note that HELOCs do have a variable interest rate, but you may have more flexible payment options than through other forms of credit.
You can borrow as much of your credit limit as needed, throughout the life of the HELOC. However, it’s important to remember that a HELOC is typically a higher amount than other types of credit, because you’re using your home as collateral. Failure to repay the amount you’ve borrowed, plus interest, could mean the loss of your home. It is important to use a HELOC responsibly, the same as you would any credit account.
Where Do I Get Started With Opening a Home Equity Line Of Credit?
To learn more about a HELOC from Carter Bank & Trust, or to schedule an appointment to get started, simply click here.