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Turn Your Home Value Into Cash With a HELOC
October 17, 2019
Are you looking to remodel your home or make some home improvements? Trying to consolidate your debt or pay for college? You can turn your home value into cash with a HELOC!
What is a HELOC?
A Home Equity Line of Credit (HELOC) lets homeowners borrow money against the equity they have built up in their home. The homeowner has a credit limit set by the lender, and then pays back the borrowed amount along with interest. A HELOC offers you convenience and flexibility by allowing you to access funds now or in the future – you get to decide when and how to use your money.
A HELOC resembles a second mortgage but works like a credit card. Your home is the collateral while you can use the credit line when and how you’d like – as long as the amount does not exceed the amount set when you get the HELOC.
Why Use a HELOC?
Since your credit line is secured by your home, the interest rate on a HELOC is generally lower than you will get with an unsecured credit card. This makes it a great option for consolidating debt. Another bonus of a HELOC is that once you are approved, the funds will be available to you for a set time period called the draw period (typically around 10 years). Once the draw period ends, you have a repayment period to pay off the loan that can sometimes be up to 20 years.
If you have a major house repair or issue that arise, you can get the funds immediately if you have already been approved for a HELOC. When it comes to home renovations, especially since those will most likely add value to your home, a HELOC can come in handy and serve as the best option for funding. When using the money wisely, you can make money when you sell your home.
Just like a credit card, you can pay off your HELOC in full at any time. If you pay off your HELOC and there’s a zero balance, you don’t have to make payments on it again until the next time you draw money. And it doesn’t matter what the minimum payment is, you can always choose to pay more. Keep in mind that some HELOCs required you to carry a minimum balance – make sure you know the guidelines of your HELOC before getting started.
How a HELOC Impacts Your Credit Score
Similar to a credit card, a HELOC has a minimum monthly payment and a limit, which can directly affect your credit score. Make your payments on time and your credit score can increase. You can also use your HELOC to pay off other credit card balances and only have one balance to manage.
Centier can show you how to leverage your home’s established equity – contact us today to get expert advice every step of the way, from application through closing!