A HELOC is an open credit line that is secured by the paid value of the borrower’s home. Homeowners can generally open a HELOC with up to 85% of their home’s equity, or the difference between what is left on their home loan and the current value of the home. HELOCs have a ‘draw’ period, during which the borrower can access the available funds, ranging anywhere from 5-10 years. Once the draw period ends, the loan will have to be repaid, either immediately or within the next 15-20 years. Once approved for the home equity line of credit, borrowers can spend the funds however they choose. Some plans may require the homeowner to borrow a minimum amount at each draw, keep a predetermined amount outstanding or withdraw an initial advance when the HELOC is first established.

Advantages of opening a HELOC include:

• You only borrow what is needed. There is no lump sum given to the borrower of a HELOC; instead, it offers a homeowner the freedom to withdraw funds from the line of credit as needed.
• Qualify for a low rate. Due to the line of credit being backed by a valuable asset, a HELOC will generally have a lower interest rate than unsecured debt, like credit cards. Additionally, interest rates continue to sink to all-time lows, and opening a HELOC now means qualifying for low interest rates for your line of credit. Most HELOCs have fluctuating interest rates, but our offer includes a 6.99% APR1 intro-rate fixed through December 31, 2024.
• Flexible terms. Terms and repayment plans for HELOCs are generally flexible, and many lenders only require borrowers to make payments toward interest during the draw period. Once that time is over, the borrower must pay back the entire principal over the course of 15-20 years.