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Home Equity Lines of Credit (HELOCs)
About HELOCs
A Home Equity Line of Credit (HELOC) is a flexible financial tool that allows homeowners to borrow against the equity in their property. Unlike a traditional loan, a HELOC works like a credit card, providing a revolving line of credit you can draw from as needed. It’s ideal for managing home improvement projects, debt consolidation, education costs, or unexpected expenses.
Find out if you Qualify for a HELOC today!
Some Key HELOC Characteristics
Revolving Credit: Access funds as needed during the draw period, typically 5-10 years.
Flexible Repayment: Make interest-only payments during the draw period, with the option to pay down the principal.
Variable and Fixed Interest Rates: Fixed rate and variable rates are available.
Borrowing Limits: Usually up to 80% of the home’s equity, minus any existing mortgage balance.
Renewable Option: Some HELOCs can be renewed or extended beyond the initial draw period.
Secured by Your Home: The loan is backed by the property, offering competitive rates compared to unsecured loans.
Considerations for Borrowers
Market Sensitivity: Variable interest rates may rise over time, increasing monthly payments.
Equity Reduction: Borrowing against your home reduces the equity you’ve built, which may affect future financial options.
Draw and Repayment Periods: After the draw period, borrowers must repay the balance, often over 10-20 years.
Usage Discipline: A HELOC provides easy access to funds, so responsible borrowing is essential to avoid overextending.
HELOC Qualifying
HELOCs are a little more stringent because they are typically in second lien position.
Credit Score: A minimum score of 620 is typically required, though higher scores may secure better rates.
Equity: Sufficient home equity is necessary; most lenders allow borrowing up to 80% of the home’s value.
Debt-to-Income Ratio (DTI): Lenders generally prefer a DTI below 43%.
Employment and Income: Proof of stable income and employment is essential to qualify.
Property Appraisal: A current appraisal may be required to confirm the home’s market value.
A HELOC offers flexibility and convenience for homeowners looking to access their equity for a variety of financial needs. Contact us today to learn more about HELOCs and how they can work for you!
Reach out to our team at (210) 987-8943. We are happy to answer your questions and would love to work with you!
Copyright ©2021 | Candy Williams Home Loans | NMLS# 187126 | Licensed to do business in Texas
This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply.
Corporate | NMLS ID NMLS# 1660690 | Corporate Address : 3100 W Ray Road #201 Office #209 Chandler, AZ 85226
Copyright ©2021 | Candy Williams Home Loans | NMLS# 187126 | Licensed to do business in Texas
This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply.
Corporate | NMLS ID NMLS# 1660690 | Corporate Address : 3100 W Ray Road #201 Office #209 Chandler, AZ 85226