Home Equity Line Of Credit

Home Equity Line of Credit



A home equity line of credit, or HELOC, is a popular way to access equity in your home. Unlike a standard loan that would pay out everything at closing, a HELOC means your lender promises to advance you a certain amount of money at times and amounts of your choosing. You can access your funds with checks or a special type of credit card.

Every HELOC has a draw period, or a time during which you can access your credit line, and a repayment period during which you must repay the loan. In most cases, the draw period will be five to 10 years. During this time, you will only pay interest on what you use. Your repayment period can last for 10 to 20 years, and during this time, your payments will go toward principal. Some HELOCs require the entire balance to be paid in full when your draw period ends, however.

Most home equity lines of credit are second mortgages, like home equity loans, although your HELOC can become your first mortgage if you use it to refinance.

Heloc Benefits

Benefits of a HELOC

A HELOC is often a better choice over a home equity loan if you have ongoing cash needs, such as irregular income.

Advantages of a HELOC include:

  • Only charged interest on money you withdraw
  • Pay down the loan and reborrow, if you wish
  • Draw funds as needed
  • Interest paid is tax deductible
  • Interest rates are usually low

Many homeowners turn to a HELOC to consolidate debt, including credit card and medical debt. HELOCs usually have interest rates that are higher than a primary mortgage, but still much lower than credit card or personal loan interest rates. Using a HELOC for debt consolidation can help you save a great deal on interest charges, but remember that your home is collateral on the loan, and if you default, you can end up in foreclosure.


Downsides of a HELOC

HELOCs are not right for every situation. The monthly payments can be unpredictable, as the interest rate variable is tied to the Prime rate, with no cap like you would get with an adjustable-rate mortgage (ARM). Changes in the market can affect the affordability of the loan.

If you need a consistent and predictable monthly payment, and you are on a fixed income, a home equity loan is likely the better choice.

Home Equity Line Of Credit

HELOC Requirements

A HELOC allows you to borrow against the equity in your home. You must typically meet the following qualifications to get approved for a home equity line of credit.

  • You must have equity. Some lenders let you get a HELOC for up to 125 percent of your equity, but most do not allow you to borrow against more than 80 percent of your equity. A home appraisal will be necessary.
  • Monthly housing costs, including your mortgage payment and HELOC payment, cannot exceed 28 percent of your gross monthly income.
  • All monthly debts must not exceed 36 percent of your monthly income.
  • You must have good credit. The higher your credit score, the more you can borrow of your equity.
  • Steady employment with the same employer or in the same field.
What Is A Home Equity Line Of Credit

Contact Us Today

Mortgage Investors Group, based in Tennessee, offers residential financing in a number of states in the southeast, See MIG Service Areas. Terms and conditions to apply to home financing. We want to share with you the loan terms vary based on several characteristics and your financial profile. These include but are not limited to loan program, loan purpose, occupancy, credit history, credit score, assets, and other criteria per loan type. The repayment terms and interest rate may vary from time to time. The terms represented here are based on certain assumptions outlined below and/or noted on the loan outline page. Additional details concerning privacy, program disclosures, licensing specifics may be found at migonline.com Legal Information.

MIG Loan Officers will help gather the information needed for an individual assessment to provide home financing which matches the loan characteristics with your home financing needs based on your financial profile, when you are ready to begin a full loan application. For estimates and general information before that step, the basis for which the mortgage financing information are as follows:
  • Rates are subject to change at any time.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Payments will vary based on program selection, current rates, property location, etc.
  • Not all programs are available in all states.
  • Some loan programs may not be available to first time home buyers.
  • Terms and conditions apply, which may include restrictions or limits per loan program.
  • Information is generally based on primary residence occupancy with no cash out when refinancing.
  • Unless otherwise stated, terms shown are estimates based in part on credit score of 700 or higher; owner occupancy, escrow account is established for taxes and insurance(s); debt-to-income ratio no higher than 43.0%; PMI applies to conventional loan programs over 80.0% LTV; VA,FHA & RD require insuring fees included in loan and/or payment; fixed rate, 30 year term.

An MIG Loan Officer is available to help with your financial details to determine which characteristics apply to your situation for a personalized look into which loan program best fits your home financing needs. Please use the Find a Loan Officer link or reach out to Mortgage Investors Group at 800-489-8910. Equal Housing Lender 1.2020