Home Equity Lines of Credit (HELOC) are an important financial tool that home owners can use in a variety of ways. If you currently own a home you can use a HELOC to access a specific dollar amount of the equity that you have in your home. The HELOC works just like a traditional line of credit in the following ways:

1. Your monthly payment is based on your balance. If you do not have a balance then you would have no payment. 
2. Your minimum payment is interest only. You can send principal whenever you like, but interest is all that is required typically for the first ten years.
3. The rate is adjustable and tied to the Prime Rate. The Prime Rate is controlled by the Federal Reserve Board and they can change rate whenever they meet which is every 6 weeks.
4. Your have a check book through which you access the line. You can write the checks for anything necessary. 
5. Once you borrow money from the line and then pay it back, you can then write another check and access the equity again. Typically you have a ten year period to borrow and then pay back in a revolving manner.

HELOCs are often used to either do home renovations or as debt consolidation tools. The funds borrowed however can be used for any purpose the borrower would like. In most cases the interest that is paid on the line is tax deductible but you should consult your tax professional for your specific benefit.
For more information on HELOCs, contact us today.

A Home Equity Loan is a second mortgage that allows the home owner to also access the equity in their property. It is a one-time withdrawal however that requires you to pay back on a specific term schedule and does not allow you to borrow in a revolving fashion. It is generally used for specific dollar amount needs. People usually choose the loan over the line when they are concerned about the rate on the line adjusting. The tax benefits for the loan are the same as the line.
For more information on Home Equity Loans, contact us today.