Your home may be one of your most valuable financial assets. A Home Equity Line of Credit (HELOC) allows qualified homeowners to access a portion of their available home equity through a revolving line of credit.
Unlike a traditional lump-sum loan, a HELOC gives you the flexibility to borrow funds as needed, up to your approved credit limit. This can make it a useful financing option for homeowners who want access to funds over time rather than receiving the entire loan amount at once.
A HELOC is a line of credit secured by the equity in your home. During the available draw period, you may generally borrow, repay, and reuse your available credit, subject to the terms of your loan.
Because you only access the funds you need, a HELOC can provide additional flexibility when expenses occur at different times.
Depending on the loan program, HELOCs may feature variable or fixed-rate options, specific draw periods, repayment periods, minimum advance requirements, and other program-specific terms.
Homeowners use HELOC financing for a variety of financial needs, including:
The appropriate use of home equity depends on your individual financial situation and goals.
Instead of borrowing one large amount upfront, a HELOC allows you to access funds when you need them, subject to your available credit line.
You generally pay interest based on the amount of your credit line that you actually use rather than the entire approved line.
For homeowners who already have a favorable first-mortgage rate, a HELOC may provide access to equity without requiring a refinance of the existing first mortgage.
As you repay borrowed funds, that credit may become available to use again during the applicable draw period, depending on the terms of your HELOC.
A HELOC and a cash-out refinance can both provide access to home equity, but they work differently.
With a cash-out refinance, your existing mortgage is replaced with a new mortgage for a larger amount, and you receive a portion of the difference in cash.
With a HELOC, your existing first mortgage generally remains in place while a separate line of credit is established using your home as collateral.
For homeowners who want to preserve the terms of their current mortgage, a HELOC may be worth considering.
While both programs allow homeowners to borrow against their equity, there is an important distinction:
A HELOC provides a revolving line of credit that can generally be accessed as needed during the draw period.
A Home Equity Loan typically provides the approved loan proceeds in one lump sum and is repaid according to a set repayment schedule.
The better option will depend on how much you need to borrow, when you need the funds, and whether you prefer ongoing access to credit or a one-time loan amount.
The amount you may qualify to borrow depends on several factors, which may include:
A mortgage professional can review your specific situation and help determine what HELOC options may be available to you.
A HELOC may be worth exploring if you have built equity in your home and want flexible access to funds without replacing your existing first mortgage.
Because your home secures the credit line, it is important to understand the interest rate, repayment structure, fees, draw period, and other terms before deciding whether a HELOC fits your financial goals.
Ready to find out how much of your home equity may be available?
We can help you review your options, compare available HELOC programs, and understand how the financing could fit into your overall goals.
Get Started Today
Contact us to request a personalized HELOC review and learn more about the programs available based on your property, equity, credit profile, and financial needs.
All loans are subject to credit approval, income verification, property eligibility, appraisal requirements, and applicable underwriting guidelines. Loan programs, rates, terms, fees, and availability are subject to change without notice. This information is for educational purposes only and is not a commitment to lend.