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Getting a HELOC, or Home Equity Line of Credit, is a major financial decision, and it’s important to weigh the pros and cons before you sign up for one. Bellco Federal Credit Union can help you evaluate your options.

Bellco FCU is a member-owned, not-for-profit federal credit union. Since 1938, we have provided unique financial products and services to individuals and small businesses in Berks County, PA. When you are facing a major life expense, our Home Equity Lines of Credit may be the ideal financing option for your situation.

If you are already a member of Bellco FCU, you can apply for a HELOC online. If you are not yet a member, but live, work, worship, or attend school in Berks County, consider opening a primary savings account with as little as $5, and become a member today!

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HELOC Pros

You will have to decide whether to seek a loan in the first place, and whether a HELOC is the best choice. Would a traditional Home Equity Loan be better? A cash-out refinance? HELOCs offer:

  • Flexibility: A HELOC gives you a line of credit, somewhat like a credit card. You can borrow as much (up to your limit) or as little as you wish, and your payments will vary each month depending on the amount you owe at the time.
  • Affordability: HELOCs are adjustable-rate loans and the interest rates are usually lower than those on traditional fixed-rate Home Equity Loans.
  • Debt consolidation: If you are paying high interest rates on large credit card balances or other loans, a HELOC can help you pay off those debts and significantly reduce your overall monthly expenses.
  • Use the funds as you wish: Unlike many other types of loans, a HELOC doesn’t require you to explain how you plan to use the money. Once the line of credit is set up, you can use the money as you wish.

HELOC Cons

A HELOC can be an easy solution when you need funds for unexpected expenses, but there are also several pitfalls to consider:

Equity reduction: Your HELOC will be added to the total amount you owe on your property. If home values decline and you have little or no remaining equity, you may not be able to refinance your mortgage or sell the home until things change.

Interest rates: Typically, HELOCs carry an adjustable rate. As interest rates fluctuate, the payments can be unpredictable. If you are on a strict budget, this can be a serious issue.

More debt: Paying off high-interest credit cards is the primary reason people apply for a HELOC. While this may make financial sense, there is always a risk that you may pay off those credit cards with a HELOC, and then accrue additional balances on your credit cards, ending up with more debt than you started with.

Bellco FCU can help you fully understand the pros and cons of the HELOC, and how it applies to your personal circumstances. Get in touch with us today!

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