Home Equity Line of Credit,more commonly known as a HELOC, is a loan that you can obtain using your house as collateral. This loan works similar to a credit card and allows a borrower to open up a line of credit. HELOC is beneficial in many ways than other loan options and generally carries lower interest rates as well. Qualifying for HELOC is simple if your credit history is above average and the value of your house is more than what you owe.
What is a Home Equity Line of Credit (HELOC)?
How does a Home Equity Line of Credit (HELOC) work?
HELOC is a revolving line of credit that allows you to borrow money against your house, even if it’s not for home expenses. A HELOC generally has a tenure of 15-25 years. This tenure is split into a draw period of 5-10 years and a repayment period of 10-20 years. Homeowners can borrow as much as they would like in the draw period, subject to the credit limit set by the lender, and they only pay interest payments until the repayment starts.
Benefits of Home Equity Line of Credit (HELOC)
- Lower interest rates compared to traditional loans
- No pre-payment fees
- Lower processing fees
- Borrowers can qualify for relatively larger loans with this type of loan, assuming you have significant equity in the house
- Borrowers get a tax benefit on the interest cost paid
- HELOC qualification is easier compared to other loan options
How Do I apply for a loan?
To get a HELOC, you have to be first eligible for it. To qualify, the value of the house minus the amount due should always be higher than the amount required under your lender’s HELOC. You can borrow up to 85% of the qualified amount. Proper research should be conducted before finalizing a lender. Interest rates vary from place to place and an appraisal is requested by the lender once your documents are submitted. The lender will generally check your credit history and finalize the disbursement amount. Getting this loan is simple once the lenders secure the house as a form of collateral.
Drew Mortgage Associates has helped many clients achieve their dream of buying their desired property. Drew’s expert mortgage professionals educate you about the available options, guiding you through every step by scanning through various loan programs and picking the best one for your objectives. If you want more information about how HELOC programs work, please visit: http://marketersmedia.com/drew-mortgage-associates-announces-new-home-equity-line-of-credit/171224