A Home Equity Line of Credit (HELOC) loan has a really long name, but we promise, it’s not as complex as it sounds. To really understand this loan type, we are going to break the name in half and define each part.
Equity regarding your home boils down to a simple equation. To get the value of your home’s equity, you have to find the difference between your home’s value and what you still owe on the mortgage. You can get a rough estimate by searching the value of your home online, but you won’t know for sure unless you get the home appraised.
|Current Market Value of Home
|– Outstanding Mortgage Balance
= Equity Estimate
Line of Credit
A Line of Credit is a loan that is used similar to a credit card but doesn’t come with an actual card to use. You can borrow from a set amount of funds with interest, pay off the loan balance, and pull funds again. These funds can be used when and where you need them, and unlike other loans, funds do not need to be pulled in full and continue to be available for use as long as the loan is open.
So by combining both of these definitions, a Home Equity Line of Credit is a secure Line of Credit that borrows against the equity available in your home. This loan can be used for renovations, repair, college tuition, consolidating balances on high-interest rate credit cards, or anything else you might be needing money for. With a HELOC you can use the funds when you need them and payback only what you spend.
You can get started on your HELOC loan with R1CU by visiting any of our locations, giving us a call at 214-540-1717, or by applying online.