Secured loans typically have lower rates than unsecured loans (personal loans, credit cards). First, your home is being used as collateral, making a HELOC a secured loan. In addition, they are usually more affordable borrowing options than other types of loans. HELOCs offer flexibility as you don't have to use the total amount that the lender provides to you. You still have $40,000 available should another emergency or unexpected expense arise. In this example, you are only required to repay the $10,000 you utilized of your HELOC. In addition, you shall have the remaining $40,000 to use if you so desire. So even though your limit is $50,000, if you only use $10,000 to pay off a medical bill, you only have to pay back the $10,000 balance. You can borrow up to your available credit limit for up to 5 years, and you only pay back the amount you actually spend. With a HELOC, it is similar to a credit card since the available balance replenishes as you pay down the loan. The lender uses your home as collateral to provide you with the funds you need. HELOC stands for 'Home Equity Line of Credit.' Think of a HELOC as a second mortgage being placed onto the house. In this example, you would be able to borrow a line of credit up to $40,000 with Financial Access Federal Credit Union.** Tap into Your Equity with a HELOC You can borrow against a portion of the equity of your home and use the funds however you wish.*Įxample: Current Market Value of Your Home The amount of your remaining mortgage is subtracted from the market value of the house. Most homeowners take out mortgage loans when purchasing their house. When people talk about home equity, it deals with the current market value of your home. Depending on several factors, such as the home's location and the state of the real estate market, your home value may appreciate over time. You can tap into this equity with a Home Equity Line of Credit (HELOC) and use the money however you need. However, if you own your house, you have an emergency lifeline surrounding you: the equity in your home.

Even smaller financial problems, such as finding the money to perform repairs after a storm, can leave you without any way to make ends meet. One medical bill can set you back hundreds, if not thousands, of dollars. Unexpected expenses or emergencies can be devastating to your finances. To see this page properly please use a JavaScript enabled browser. Your browser either does not support JavaScript or you have it turned off.

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