What is a home equity line of credit?

Home Equity Line of Credit

A Home Equity Line of Credit (HELOC) provides the Ability to access equity in your home as a second lien while you still own the home. This is useful when people are buying a new home and don’t need or want to have the contingency to sell their current home.  Or if you want to do some improvements to your home you may be able to do so using a HELOC.

• Low or no closing costs – typical have an annual fee and small early payoff fee

• Downside: Interest only – only use for short term, not a long term hold

Example

• Current house value $500,000

• Current mortgage $200,000

• HELOC – 80% of $500k = $400,000 - $200,000 first mortgage = $200,000 equity line