Everyone can use an infusion of funds, especially during the holidays. Whether you’re looking to pay off credit cards, consolidate debts, pay off next semester’s tuition for your children or deal with medical bills, access to additional funding is quick and easy with a home equity line of credit (HELOC).
What Is A HELOC?
As you pay off your home loan, you build equity (equity is the difference between your home value and loan amount). With a home equity line of credit, you can access that equity and use it to make purchases. What’s even better is that home equity lines of credit offer additional benefits versus traditional loans or credit cards, including competitive rates, low closing costs and possible tax deductibility.
How Does A HELOC Differ From A Home Equity Loan?
The simplest way to understand the difference between the two is this: A line of credit remains available to you even after your balance is paid off. A loan, on the other hand, is a one-time transaction that’s paid off over time with regularly scheduled payments of principal and interest.
Finding out how much equity you have in your home is easy. It’s just a matter of completing this simple calculation. First, estimate the value of your home. You can get approximate information by looking into your property tax assessment or the recent sale prices of similar homes in your area. Keep in mind these are just estimates and lenders will usually have an appraisal performed in order to determine your home’s value.
Next, calculate the total of any mortgage(s) and any liens on the property. Finally, subtract the total amount of any mortgages and any liens from your approximate home value.
For example, if your home is worth $150,000 and you have a $100,000 mortgage remaining, you have $50,000 in home equity. Typically you may be able to borrow a portion of this equity. There are many factors that determine whether you’ll qualify and how much you’ll qualify for, so contact Ed Currie today for a free consultation.