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Home Equity Line of Credit Loans | HELOC Mortgage Rates

HELOC stands for home equity line of credit. In this type of loan the lender or the creditor agrees to make a line of credit available to the homeowner over a fixed period of time. In this type loan the equity in the house is used as collateral. If there is an existing first mortgage on the home, the HELOC is subordinate or secondary to the first mortgage. In other words, in the case of a default, all proceeds available from a sale or foreclosure of the home go first to the existing mortgage and any monies left over are paid on the HELOC.

Home equity line of credit loans are very convenient since you can both take money from the loan or repay what you have borrowed over the life of the loan. With the equity in the home serving as collateral, the rate of interest is lower than rates on unsecured loans like credit card advances, pay day loans and the like. Some tax benefits are associated with this type of loan exist, but one should review the most recent tax rules to know what currently applies. Apply Online and get more Information about HELOC

HELOC vs. HEL (line of credit vs. home equity loan)

The basic difference between home equity loans (HEL) and a HELOC loan is that you can get a lump sum payment in a HEL and agree to repay this amount over a fixed time. For example you may get a HEL for $10,000.00 and agreed to repay it over 10 years. With a HELOC loan, one has a line of credit up to a fixed maximum amount and can both borrower and repay funds as needed. At an pre-agreed to time, the HELOC “expires” and the all borrowed funds are due and payable. The primary benefit of a HELOC Loan is the flexibility in the amount borrowed. This feature allows the homeowner to borrow less if that’s what’ needed. An HEL is generally a fixed amount equal to an agreed to percent of the home’s equity value. Which one works best depends on the circumstances and the perception of loan applicant. Free Consultation to learn more about HELOC or a HEL- APPLY NOW

What can I do with a HELOC?

With the help of a home equity line of credit loan there are several things one can do.

• The house can be renovated, a room added or other improvements made
• Outstanding debts with a higher rate of interest, like credit card bills, can be paid off.
• You can pay the education costs for yourself, your children or any one else.
• The medical bills can be paid

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Some of the major advantages of a HELOC loan are as follows

• The loan can be processed and closed faster than many types of loans, so you get the proceeds sooner
• The rate of interest is relatively low and depending on your home value and credit, it can be a very attractive rate
• The HELOC can be used as a flexible source of funds
• Check with a professional for current potential state and Federal tax benefits.

Benefits of HELOC loans

HELOC loan provides the borrower with a revolving credit line. The borrower can access funds whenever needed. This loan works similar to a credit card. Some things to remember when looking for best HELOC loan for your needs are:

• If you are asked to put down a deposit when applying for a HELOC, be sure you understand if it’s refundable and not. If not, know the reasons why.
• There may be late payment penalties.
• The HELOC loan should have flexible interest rates depending on whether rates are going up or down. Some “adjust” every few months. Also you should be able to convert the loan from adjustable rate to fixed rate and vice versa.
• Seek clarification from the lender regarding fees for such things as check writing and account maintenance.

Alternatives to a HELOC

There are other ways to access the cash from one’s home equity that has built up over time. One of the most common ways is the home equity loan, referred to as HEL, where one can generate a lump sum of cash based on the value of the home’s equity. This loan can be paid back over a period of time, generally several years. The loan amount is directly proportional to the home’s equity. The other option is the second mortgage which can be similar to the home equity loan. As far as benefits are concerned, much depends on the value of your home, the amount of your equity, how you plan to use the funds and your current credit situation. Home equity lines of credit loans offer many benefits and compares well with all the options available. Take advantage of a Free Consultation With one of our Network’s Professionals to see if a HELOC works for your needs. APPLY NOW

Is a HELOC Better Than a HEL?

Whether a HELOC works better depends on your financial situation. If you need the money in a lump sum, then it may be better to take advantage of a HEL. Unlike a HEL, a HELOC is similar to using your home’s equity as a credit card. You borrow money when you need it and you also pay it back when you have funds available. With a HEL there’s usually a fixed rate of interest and a fixed term. With a HELOC the term can be variable. One can also make provisions for converting the adjustable rate of interest into fixed rate of interest in order to take advantage of a fixed rate home equity line of credit. For Help or More Information about a HELOC or HEL - Apply Online Today

How a HELOC works

A home equity line of credit is similar to that of a revolving credit card. You can take out cash when you need until you reach the limit that has been set. Just like a limit on a credit card. Accessing the available funds in the best home equity line of credit loans is simple. Funds are available through writing a check or using an ATM card or charging a credit card tied to the HELOC.

Like a credit card, the borrower needs to make monthly payments to cover the interest and if additional funds are paid, they are applied to the principal. As you reduce the principal balance this in turn lowers home equity line of credit monthly payments. You can even pay off the entire principal balance and “re-borrow” the funds any time you want to before the expiration of the loan. It’s just like paying off a credit card and once the balance is zero making a new charge.

Once the line of credit expires, the borrower can either renew the loan or stop using the HELOC. At this point outstanding funds need to be repaid. There is usually an agreed time period for repayment. The HELOC Loan can be called HELOC mortgage too.

Usually the borrowing period varies from 5 to 10 years, followed by a repayment period that varies from 10 to 15 years. There are some HELOC lenders who don’t use a fixed term for withdrawing or borrowing the funds nor do they have a fixed term for repayment; the loan can be continued till the property is sold.

Example of how a HELOC works:

Suppose the value of the equity in a home is $ 15,000. You made a loan of $ 7,000 and have repaid $4,000 over a period of 1year. This makes the outstanding loan to be repaid $3,000. The new equity value for the time is now $12,000 ($ 15,000-$3,000) $12,000. This new equity amount is the result of having made a HELOC. If you decide you want to apply for a home equity line of credit loan down the road, the new equity value is what you will be using plus or minus any change in your home’s equity over the time period since the last HELOC.

We can help you learn more about a HELOC and see if it fits your financial situation. APPLY NOW

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