A Home Equity Line of Credit (HELOC) allows you to leverage a portion of the equity in your home as a convenient financing source. The amount of equity you have in your home is determined by subtracting the amount of your current mortgage balance from the appraised value of your home. The difference is your “equity”.
A HELOC is a revolving line of credit secured by the equity in your home. Unlike a traditional Home Equity Loan, a HELOC offers more flexibility and accessibility. Access any amount from $500 up to the full amount of your credit line by using a check or asking us to transfer funds to your checking account.
Pay as little as the minimum payment or the full amount each month and pay interest on only the outstanding balance. And you can access it over and over again.
HELOCs often come with lower interest rates compared to other forms of financing such as personal loans or credit cards, which make it an attractive option for cost-effective borrowing. A HELOC at NUFCU offers a variable interest rate, based on the Federal Reserve’s prime rate. If the Feds lower interest rates, your rate will go down.
Common Uses for HELOC Financing
- Home Improvements
Many of our members use HELOCs to fund home improvement projects, increasing the value of their property. Adding a deck or remodeling a kitchen not only makes your home more enjoyable but will bring value to your home in the long run. During the home improvement process, you are paying interest and making payments only on the amount of funds you need to access each month.
- Debt Consolidation
A HELOC can be used to consolidate high-interest debt, such as credit cards or personal loans, into a single, more manageable payment. Consolidating debt can save money on interest payments and help you get debts paid off faster.
- Education
A HELOC can be an affordable and convenient way to pay for education expenses like tuition, books and housing for you or a family member when subsidized lending sources are exhausted. Again, you make payments on only the portion of the credit that you are accessing each month.
- Emergency Fund
A HELOC can provide peace of mind as a financial safety net for unexpected emergencies. Having funds at the ready can act as a financial cushion without the pressure of a fixed monthly payment.
Borrow Wisely
While a HELOC can be a convenient financing option, borrowers need to recognize the importance of responsible use of a HELOC, considering potential risks such as fluctuating interest rates and the risk of foreclosure.
When considering a HELOC, be sure to discuss the key advantages and risks of using a HELOC for financing with a trusted loan officer. For many people a HELOC is a convenient financial tool and a strategic option for achieving their goals.