A home equity line of credit (HELOC) offers a flexible way to borrow funds. HELOCs differ from traditional home equity loans in that you can draw money from a HELOC as needed instead of taking out a single lump sum loan.
With a HELOC from Divito Lending you can:
A HELOC is a revolving line of credit similar to a credit card. You can borrow funds up to a set credit limit, and interest is charged on the amount borrowed. The revolving credit line can be paid down and reused during your draw term, which typically lasts 5 to 10 years. You’ll only pay interest throughout the draw term. After the draw term is complete, you may either pay the balance in full or pay according to a set schedule (interest must still be paid). You may also refinance the equity line for an additional 5 to 10 years. A home appraisal may be required to obtain a HELOC.
HELOCs offer variable or fixed interest rates that are usually lower than the interest rate on a credit card. Credit limits are also variable and depend on your equity.
Closing is easy and may even take place in your own home. You also don’t have to pay closing costs or appraisal fees.
Several options are available to you for accessing cash, including personal withdrawals, check writing and card use.
With a HELOC, you choose how much to borrow and use, as well as how much to repay and when, provided it’s equal to or more than the minimum payment.
Depending on your situation, interest paid on a HELOC may be 100% tax deductible under federal and state income tax laws. Not all states may allow this deduction. Consult a tax advisor to make sure you’re eligible.
Generally speaking, your credit history and score don’t have a major effect on obtaining a HELOC because your home secures the loan. Equity in your home will be a key component in determining your available credit. When considering a HELOC, remember that the loans are secured by your home. Failure to pay could damage your credit standing and result in the loss of your home through foreclosure.