HELOC Frequently Asked Questions
What is a HELOC used for?
A Home Equity Line of Credit allows you to borrow against the equity in your home. How you choose to use the money is up to you. Popular reasons to take out a HELOC include making improvements to your home, consolidating high-interest debt, or funding emergency expenses. Either way, you want to be sure that your decision makes sense for your bigger financial picture.
How does a HELOC affect your credit score?
A Home Equity Line of Credit will impact your credit score, similar to a credit card. You want to be mindful of your utilization rate, which is the percentage of your credit limit currently being used. Having too much debt can negatively impact your credit score.
How do payments on a HELOC work?
Payments on a Home Equity Line of Credit are similar to the payments you'd make on a credit card. The amount will depend on how much you borrow at any given time. The more you borrow, the higher your payments will be, and vice versa. HELOC payments are unlike a Home Equity Loan when you borrow a lump sum and make the same payment each month.
How much can you borrow on a HELOC?
You can borrow up to 80% of the value of your home.
Here's an example. If the value of your home is $300,000 and the mortgage balance is $100,000, you have $200,000 in equity.
$300,000 x 80% = $240,000
$240,000 - $100,000 = $140,000
You can establish a HELOC with a limit of up to $140,000.
Are You Ready For A HELOC?
If you're considering moving forward with a Home Equity Line of Credit, let Best Reward Federal Credit Union support you in showing you how this could work for your situation. Our HELOC specialists can provide you with a no-obligation quote and answer any questions you have about the process. Give us a call or start the process online, and we'll be in touch. We're ready to support you when you decide to take the next step.