Manage episode 288374827 series 1061386
A home equity line of credit, or a HELOC, is a revolving line of credit that is guaranteed by the equity in your home. The line of credit is actually a second mortgage on your home giving you access to a revolving credit line you can borrow from as needed.
Very similar to a credit card, a HELOC offers a line of credit at a much lower interest rate because your home is used as the collateral for the loan.
The amount you can borrow is based on the equity in your home, which is equal to the value of the home minus the amount you owe on your primary mortgage. If your home is paid off, then the HELOC becomes the first position mortgage on your home.
A HELOC can be used for things like home improvemetns, emergency funds, large down payments on second properties, investment opportunities, or even a way to pay down debt faster.
In the episode, I will break down:
- How a HELOC works
- How the interest is calculated
- Draw period versus repayment period
- How to apply fora HELOC
- When a HELOC is not a good plan
If you have ever wondered about opening a home equity line of credit, this is the perfect episode for you.
Mentioned in this episode
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Today's show was brought to you by OneAZ Credit Union — my very own credit union I have been proud a member of since 2011.
If you live in Arizona and are looking for a large credit union with a local, customer-focused feel for your personal or business banking needs, look no further than OneAZ Credit Union.
All the show notes, links and anything I mentioned can be found at https://www.moneypeach.com/session162