A Home Equity Line of Credit, or HELOC, is a flexible financial tool that allows you to tap into the equity of your home. HELOCs typically offer lower interest rates compared to personal or unsecured lines of credit, making it an attractive option for homeowners. It’s essential to note that the total of your existing mortgage and HELOC cannot surpass 80% of your home’s appraised value.
Calculating your home’s available equity is a straightforward process. Start by multiplying your most recent appraised home value by 80%, and then subtract your current mortgage balance. This calculation will reveal the amount of equity at your disposal. For instance, if your home is appraised at $700,000.00 and your existing mortgage balance is $400,000.00, you may qualify for a maximum HELOC of $160,000.00. Take the first step towards accessing your home’s equity—APPLY NOW!
While HELOCs generally offer lower interest rates, it’s important to remember that they are not an unlimited source of funds. HELOCs are designed for revolving credit, with interest calculated daily at a variable rate tied to the prime rate. Typically, HELOC rates are slightly higher than traditional mortgage rates.
Unlike traditional mortgages, where you make regular payments to reduce both interest and principal, HELOC holders are responsible for paying the monthly interest on their outstanding balance. The flexibility to make balance payments at your own discretion comes with the responsibility of managing your HELOC diligently. For more information on HELOCs and other mortgage options, especially if you have bad credit, reach out to Interfinance Mortgage Corporation.