Home Equity Line of Credit [HELOC]

Benefits and Eligibility

• Only pay on what you use. You don't have to draw the entire amount you're eligible for, but it is available if you need it.
• Borrow funds over time as needed using convenience checks. As you repay the balance during the draw period, you can continue to withdraw from your available credit.
• HELOCs typically have lower rates than personal loans or credit cards because they are secured by the equity in your home.
• Can be used for primary, second homes, or investment properties.
• 3 or 5-year draw period options.
• Requires some available equity in your home.
• Not available in all states.

How does a HELOC work?

A Home Equity Line of Credit, or HELOC, is a type of second mortgage that lets you borrow against the equity you have built in your home. How you use your HELOC funds is up to you, but some common uses are to make home improvements, pay for large expenses such as college tuition, or to consolidate debt.

The HELOC can be used as needed during your draw period, which is the time frame between opening it up until your repayment begins. During the draw period, you make interest-only payments on the amount you have borrowed. At the end of your draw period, you can no longer pull funds from the credit line, and you enter the repayment period. During the repayment period, you will make payments on the amortized principal and interest for your remaining balance. 

Who should use a HELOC?

If you need a large sum of cash on a revolving basis to fund big expenses but you're not sure exactly how much you need or if those needs may change over time, a HELOC may be a good choice.

If you're not sure a HELOC is right for you, there are other options for tapping into your home's equity. A Home Equity Loan is another type of second mortgage that lets you borrow a lump sum against your home's equity with fixed monthly payments. A cash-out refinance allows you to refinance your current mortgage to a higher amount, allowing you to receive the difference.