If you have equity in your home and wonder whether or not you should get a HELOC (Home Equity Line of Credit), the experts at Bellco Federal Credit Union have provided some information that may help you decide.
Bellco FCU, headquartered in Berks County, PA, has been a member-owned, not-for-profit federal credit union since 1938, and continues to offer unique financial products and services to individuals and small businesses.
About Home Equity Lines of Credit
Your home equity is the difference between your home's current market value and the amount you still owe on your mortgage and any other liens on the property (such as a second mortgage, also called a “Home Equity Loan”).
Your home equity can grow if the value of the property increases or you pay down your mortgage balance over time. If you owe more than your home is worth, you don’t have any equity.
A Home Equity Line of Credit, otherwise known as a HELOC, enables you to borrow against the equity in your home (up to 85% of your home equity value), on an as-needed basis. Similar to a credit card, you can repeatedly pay back and borrow from the line of credit whenever you need the money during what is called a “draw period,” (typically 5 or 10 years).
During the draw period, you will be required to make modest payments on the HELOC. As you pay down the principal, your credit line revolves, and you can use the funds again and again for the duration of the draw period. When the draw period ends, you will enter a repayment period during which you will pay off the debt more aggressively.
A HELOC can be an excellent source of funds if you need major home repairs, such as replacing your roof, central air conditioning, furnace, old cast-iron plumbing, or when remodeling a kitchen. A HELOC may also be a good option if you are paying for a child’s college tuition. Pay the tuition, pay off the amount, and then borrow from the line of credit again next semester.
Bellco FCU offers a variety of other financing options, including the traditional Home Equity Loan, which provides funds in a lump sum at a fixed rate for a fixed term, similar to refinancing your mortgage, but without many of the closing costs.
Not Yet a Bellco FCU Member?
Membership in Bellco FCU is open to individuals 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 also be eligible to join and take advantage of competitive rates for mortgages, HELOCs, Home Equity Loans, personal loans, credit cards, and the many other services we offer.
Bellco FCU offers HELOCs with the lowest possible interest rates, low fees, and attentive, friendly service from start to finish! If you have questions about whether you should get one, get in touch with our home lending specialists to discuss your options.