In order to get an accurate estimate of the amount you are eligible for, you must use a Home Equity Line of Credit calculator available on our website. However, before actually putting down your biggest asset as collateral, there are a few things you should know.
In the simplest words, it is a method of obtaining credit by providing your home as collateral. The bank establishes the maximum credit balance after evaluating the value of the home. The line of credit can be drawn on your own discretion. The interest rates associated with HELCO are variable and depend on the prevailing interest rates.
The repayment schedule is in your hands, but you have to pay at least the minimum interest rate every month. The term is also quite flexible and can range from five to twenty years ideally. Once the term has ended, the remaining balance is required to be paid in full.
One thing that is same for both HEL and HELCO is that your home’s equity is used to offer instant and significant financial help. The difference is how that benefit is offered. In case of Home Equity Loan, you will get access to the whole amount in a single go.
In case of Home Equity Line of Credit, you get a convenient and continuous access to the fund. You can use the amount for your current needs as well as future plans. Since the amount is usually huge, most people opt for Home Equity Line of credit in order to achieve their bigger goal such a higher education or severe medical issue.
Home Equity Loans have a fixed and therefore higher interest rate. While the rate for Home Equity Lines of Credit is lower, it is variable and depends on the prime interest rate.
HELCOs eligibility criteria are fairly simple. You must have at least 35 percent equity in your home. However, what is more important to know is whether you need to apply for HELCO or not. It all depends on how much credit you will receive and whether you need that amount or not. Unless you have a plan for that amount, you are likely to waste it on petty things. We are not accusing you of over-spending. It is just a statistically proven fact. So, make sure you know you are not getting less or more than you need. Our Home Equity Line of Credit Calculator can help.