Hello, HELOC: How Home-Equity Lines of Credit Could Improve Your Home, Savings and Life
Thanks to the COVID-19 pandemic, we’ve all been spending more time in our houses over the past year or so. Maybe this has highlighted the need for home improvements. Perhaps staying cooped up has given you the travel bug. You may have had to spend down your savings or run up your high-interest credit cards due to financial hardships. If any of these situations sounds like yours, a home-equity line of credit (HELOC for short) could be the solution you need to unlock a healthier financial future.
What is a HELOC?
It’s a revolving line of credit that allows you to borrow against the equity in your house. What is equity, you ask? Equity is the difference between the value of your home and the amount you owe on the mortgage.
For example, let’s say your home is valued at $250,000 and you owe $150,000 on your mortgage. In this situation, you’d have $100,000 of equity. That means, potentially, you’d have access to a hundred grand through a HELOC.
Something to consider: The housing market in the region is hot right now. Your home might be worth significantly more than you know. It might be time to take a look.
What are the advantages of a HELOC?
A HELOC typically offers more borrower-friendly terms than other types of debt—most notably, the interest rate. It isn’t uncommon for credit cardholders to pay 18 percent interest on their debts. In comparison, you might be able to secure funds through a HELOC for as little as four percent for a five-year term.
What’s more, depending on how you put the funds to use, you may be able to deduct the interest you’re paying on your HELOC at tax time.
Finally, a HELOC offers quite a bit of flexibility since there aren’t many restrictions in terms of how you can use your funds. Here are just a few examples:
- Home improvements
- Emergency funds
- Debt consolidation
- Down payment on a vacation home
Be careful when deciding on whether a HELOC is right for you.
You can get a relatively low interest rate on a HELOC because it’s what’s known as a secured loan. In other words, you’re putting up your home as collateral against the money you’re borrowing. Because of this, you should carefully consider whether you anticipate you’ll be able to make the payments. The good news with a HELOC is that you don’t need to withdraw the total approved amount—just what you need. This added flexibility can help you plan.
Check out Levo's HELOC offerings.
The very best way to decide if a HELOC is right for you is to discuss your options with a professional. We’re here to help. Here are a few things to understand going into that discussion.
Our origination fee is just 0.75 percent of the loan amount.
We understand that life moves quickly—and that’s why we do, too. You’ll know your approval status when you meet with your loan officer.
Local pros you can trust
Our team makes the qualification process smooth, simple and speedy. Plus, all loans stay in-house.