What will you use your Home Equity Line of Credit for?
A Home Equity Line of Credit (HELOC) Loan allows you to borrow against your equity and free up cash for any of several purposes. You might use the money to:
- Finance a home-improvement project.
- Consolidate balances on credit cards or other personal loan debts that have a higher interest rate into a single loan. Since your home is used as collateral this type of loan may have lower interest rates, making it possible to pay the debt off sooner.
- Cover emergency expenses. If you don’t have money set aside for emergencies, you could use a HELOC to pay for medical bills or other unexpected costs.
Unlike some other types of loans, a home equity line of credit is something you establish ahead of time and use when and if you need it. With a HELOC, your home is used as collateral.
Here are some things to know about a HELOC when determining if this is the right loan for you:
- Rates are variable, based on the Wall Street Journal prime rate
- Payments are toward interest only over the course of 5 years
- Loan matures at the end of 5 years*
- Draw period is 5 years, meaning you can take as many advances as you want during the 5 year term
How to apply
Since a HELOC uses the equity you have established in your home, you will fill out a Mortgage Loan Application. Simply begin a new application, and you will find an option to select “Home Equity.”
*Loan matures at the end of 5 years and any outstanding balance will be due.