A HELOC uses your home as collateral to give you access to a sizable line of credit.
They are structured as variable interest loans, which means the interest rate on your HELOC is subject to change over time.
HELOCs are good if you need access to cash over a specific period of time. For example, HELOCs are often used to fund home remodels. This is because the structure of a HELOC allows for cash to be withdrawn as needed and only pay interest on the funds used for the first 10 years. When a contractor needs to be paid during different stages of the remodeling process, you have the freedom to withdraw the needed funds without having to get another loan approval. Other uses include:
- Paying off high-interest credit card debt
- Life changing events, weddings or unforeseen medical expenses
Consult a tax advisor regarding the deductibility of interest.
NMLS #649058. Mortgages available in Arizona, California, Colorado, Hawaii (1st TD only), Idaho, Montana, Nevada, New Mexico, Oregon, Texas (1st TD only), Utah and Washington.