Access your home equity with a flexible line of credit that lets you borrow only what you need, when you need it
Unlike a lump sum loan, a HELOC allows you to draw funds as needed rather than receiving all the money upfront. This gives you the flexibility to use exactly what you need, when you need it, and you'll only pay interest on the amount you actually borrow.
Similar to a credit card, a HELOC is a revolving line of credit. As you repay the principal, your available credit replenishes, allowing you to borrow again during your draw period without applying for a new loan. This provides ongoing financial flexibility for years.
Many HELOCs allow interest-only payments during the draw period, which typically lasts 5-10 years. This results in lower monthly payments initially, giving you greater cash flow flexibility. After the draw period ends, you'll enter the repayment period where you'll pay both principal and interest.
If you use your HELOC to buy, build, or substantially improve your home, the interest may be tax-deductible. Consult with a tax professional about your specific situation to understand the potential tax advantages of a HELOC.
HELOCs typically allow you to access up to 85% of your home's value, minus the amount you still owe on your mortgage. This often results in higher borrowing limits than unsecured personal loans or credit cards, making them ideal for larger expenses.
Because HELOCs are secured by your home, they generally offer lower interest rates compared to unsecured debt like credit cards or personal loans. This can make them a cost-effective borrowing option for homeowners with sufficient equity.
Typically need at least 15-20% equity in your home. Most lenders allow borrowing up to 80-85% of your home's value minus your remaining mortgage balance.
Most lenders require a minimum credit score of 620-660, with better rates available for scores of 700+. A strong credit history demonstrates your ability to manage debt responsibly.
Your DTI ratio should typically be 43% or lower, including all existing debt payments plus the potential maximum HELOC payment. This ensures you can comfortably handle the additional debt.
You'll need to demonstrate stable, reliable income sufficient to make monthly payments. Lenders typically want to see at least two years of consistent employment or income history.
Most HELOCs are available for primary residences. Second homes and investment properties may qualify with stricter requirements, higher rates, or lower loan-to-value ratios.
Lenders prefer a clean mortgage payment history with no late payments in the last 12-24 months. Your overall credit history should show responsible management of existing debt.
Complete our online application form with your personal information, property details, and desired HELOC amount. This first step helps us understand your needs and begin evaluating your eligibility.
Provide required financial documents including recent pay stubs, W-2s, tax returns, bank statements, mortgage statements, and information about other debts and assets. Complete documentation helps expedite your approval.
We'll arrange a professional appraisal of your property to determine its current market value. This assessment is crucial for calculating your available equity and establishing your maximum HELOC amount.
Our underwriters will evaluate your application, credit history, income verification, debt-to-income ratio, and property value to determine your loan terms and interest rate. This thorough review ensures responsible lending.
Once approved, you'll review and sign the final HELOC agreement, which includes your credit limit, draw period, repayment terms, and interest rate details. After closing, you'll receive access to your funds through various withdrawal methods.
| Feature | HELOC | Home Equity Loan |
|---|---|---|
| Fund Distribution | Draw as needed during draw period | One-time lump sum |
| Interest Rate | Variable rate (typically) | Fixed rate |
| Monthly Payment | Variable during draw period | Fixed monthly payments |
| Term Structure | Draw period (5-10 years) + repayment period (10-20 years) | Fixed term (5-30 years) |
| Best For | Ongoing or uncertain expenses | One-time large expenses |
| Interest Accrual | Only on amount drawn | On full loan amount |
| Closing Costs | Often lower | Typically higher |
We used our HELOC to fund a kitchen renovation that significantly increased our home's value. The flexibility to draw funds as different phases of the project progressed was exactly what we needed.
Having a HELOC in place gave us peace of mind when our daughter started college. We were able to help with tuition when needed but only paid interest on the exact amount we borrowed each semester.
After comparing our options, a HELOC made the most sense for our situation. We've used it for several home improvement projects over the years and appreciate the flexibility it provides.
A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home's equity. It works similarly to a credit card, allowing you to borrow up to a certain limit, repay, and borrow again during the draw period (typically 5-10 years). HELOCs generally have variable interest rates and you only pay interest on the amount you actually borrow, not the entire credit line.
Most lenders allow you to borrow up to 80-85% of your home's appraised value, minus your existing mortgage balance. For example, if your home is worth $400,000 and you owe $250,000 on your mortgage, at 80% loan-to-value ratio, your total borrowing capacity would be $320,000 ($400,000 × 0.80). Subtracting your existing mortgage ($250,000) means you could potentially qualify for a $70,000 HELOC.
The draw period is when you can actively borrow from your HELOC, typically lasting 5-10 years. During this time, you can make interest-only payments or interest plus principal payments. Once the draw period ends, you enter the repayment period (typically 10-20 years) where you can no longer borrow from the line and must make regular payments to repay the principal and interest.
Most HELOCs have variable interest rates that fluctuate based on market indexes like the prime rate. When the prime rate changes, your HELOC rate typically changes as well. Some lenders offer options to convert portions of your HELOC balance to fixed-rate loans during the draw period, providing rate stability for those portions of your balance.
You can use a HELOC for virtually any purpose, including home improvements, debt consolidation, education expenses, emergency funds, major purchases, medical bills, or investment opportunities. However, the most financially prudent uses are those that either build long-term value (like home improvements) or address high-interest debt.
Common HELOC fees may include application fees, origination fees, annual maintenance fees, early termination fees if you close the line within a specified period (typically 3-5 years), and third-party fees for appraisals, title searches, and recording. Some lenders offer "no-closing-cost" HELOCs, but these may have higher interest rates to offset the waived fees.
Under current tax law, HELOC interest is tax-deductible only if the funds are used to buy, build, or substantially improve the home that secures the loan (known as "qualified residence interest"). Interest is not deductible when HELOC funds are used for other purposes like debt consolidation or personal expenses. Always consult a tax professional for advice specific to your situation.
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For information purposes only. This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. E Mortgage Capital, Inc. d/b/a E Mortgage Capital, NMLS# 1416824. Equal Housing Lender (NMLS consumer access: https://www.nmlsconsumeraccess.org/_)
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