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Home Equity Line of Credit (HELOC)

The Key to Great Interest Rates

Unlock the value of your home with a home equity line of credit (HELOC). A HELOC allows homeowners can borrow against the equity they’ve built up in their home. You can use the funds for a variety of reasons. Some of the most common include:

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HELOC FAQ

What is a Home Equity Line of Credit?

A home equity line of credit (HELOC) is a loan that a current homeowner can use to borrow against the equity they have built up in their current home.

What is equity?

Home equity is the value of your home compared to what you owe on it. Traditionally, your home builds equity in several different ways. First, it builds equity when making regular payments on your loan. As you make the payments, your mortgage debt decreases. Another way to gain equity is making home improvements; you increase the value of your home compared to your debt. Over time your home will tend to appreciate in value, creating additional equity. All of these are ways in which you can build equity in your home.

Why would someone get a HELOC vs. refinance their mortgage?

A refinance and a HELOC are two different scenarios. Many homeowners choose to refinance their mortgage based on the want or need to take one step closer towards paying off their mortgage. However, a homeowner may choose to refinance and draw funds from the mortgage to improve their home based on the great rate they received for the loan. While this is an available option, it may not always be the cheapest. A HELOC tends to cost less for the homeowner while also providing a competitive rate. A HELOC also allows the homeowner to make interest payments within the first few years of obtaining the loan, while a mortgage loan would require principal and interest payments right away.

What qualifies someone for a HELOC, and how do the payments work?

In order to qualify for a HELOC, the homeowner needs to have more than 20% equity in their home, good credit and be able to afford the loan. For the first five years of the loan, payments are interest only and are required monthly. After the five-year draw period, if there is a balance on the loan, we will amortize the payments out over 10 years at a fixed rate with principal and interest payments.

Can a HELOC only be used on home improvements or home associated purchases?

A HELOC is commonly used for home improvements but it is available to you for other needs as well, such as consolidating high interest debt, vacations or appliances.

If I have a HELOC and choose to sell my home, what happens?

Your HELOC may be a separate loan from your mortgage, but they do go hand in hand. If you decide to sell your home, you will have to pay off the HELOC with your mortgage or roll it over into a separate loan. There are always other options that may be available on a case by case basis.

How can I apply for a HELOC?

If you’re interested in learning more about a HELOC or would like to see if you qualify, you can contact one our lenders below. We will meet with you to discuss the next steps and options.

Mortgage Lending Team

Michael Fohey
Michael Fohey VP | Mortgage Center Manager NMLS ID: 718442
Kim Terpstra
Kim Terpstra Mortgage Loan Officer NMLS ID: 776940
Kevin Jorgensen
Kevin Jorgensen Universal Banker III | Mortgage Lender NMLS ID: 1666771
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