Are you thinking about using the equity in your home in Kutztown, PA as collateral for a Home Equity Line of Credit (HELOC)? Apply online or in person at Bellco Federal Credit Union to take advantage of our great rates!
Originally known as the Bell Telephone Credit Union, Bellco FCU, a member-owned, not-for-profit federal credit union, opened its doors in 1938 and continues to provide unique financial products and services to individuals and small businesses in Berks County.
About Home Equity Lines of Credit (HELOC)
A HELOC is a loan that is designed to put your home’s equity to work for you. It works very much like a credit card and funds can be accessed when needed.
The interest rate on a HELOC may be lower than that of traditional fixed-rate mortgages, credit cards, and other types of personal loans, so it may be the perfect solution when you need to borrow small amounts over a longer period, such as for an extensive home renovation project or to pay ongoing tuition fees.
Things to Know About HELOCs
There are several factors lenders like Bellco FCU use to determine exactly how much you can borrow, and each lender will have different requirements.
Equity. When you apply for a HELOC, you must have equity in your home because it will serve as collateral for your loan. If your home is worth more than the balance left to pay on your mortgage (and any other debts secured by your home), you have equity. If, for example, your home has a market value of $250,000 and you owe $150,000, you have $100,000 in equity. To verify the home’s market value, the lender may require an appraisal.
Loan-to-value (LTV) ratio. Lenders use the loan-to-value (LTV) ratio to determine how much you can borrow. Let’s say you are looking for a $10,000 line of credit and owe $150,000 on your mortgage (using the information in #1 above). If your home is currently valued at $250,000, the LTV would be 64%. Many lenders limit HELOCs to a maximum of 80% LTV.
Income. Your lender will want to know that you have sufficient income to cover the cost of your current debts, plus the additional HELOC debt you will be taking on. In most cases, the lender will be looking for a debt-to-income ratio of less than 43% and will also look at your assets, employment, credit history and monthly expenses to determine your ability to repay the loan.
Credit score. The higher your credit score, the better, but most lenders will work with you even if you have had credit problems in the past.
Why Not Join Bellco Today?
Membership in Bellco FCU is open to people who live, work, worship, or attend school in Berks County, PA. Simply open a Member Savings account with as little as $5, and set up your membership in a few simple steps.
Once you are a member, your immediate family members will be eligible to join too and take advantage of competitive rates for mortgages, personal loans, credit cards, and the many other services we offer.
If you are already a member, you can apply online for a home equity line of credit in Kutztown, PA from Bellco FCU. If not, join today to take advantage of our many products and services!