{"id":2766,"date":"2020-06-09T16:32:35","date_gmt":"2020-06-09T23:32:35","guid":{"rendered":"https:\/\/www.dncu.com\/?p=2766"},"modified":"2024-10-29T11:34:32","modified_gmt":"2024-10-29T17:34:32","slug":"home-equity-line-of-credit-heloc","status":"publish","type":"post","link":"https:\/\/www.dncu.com\/es\/blog\/home-equity-line-of-credit-heloc\/","title":{"rendered":"Home Equity Line of Credit (HELOC)"},"content":{"rendered":"

If you\u2019re looking at ways to pay for your child\u2019s college education or to do home improvements, tapping into your home\u2019s equity is one way to come up with extra funds. Home equity is the difference between what you owe on the mortgage and what your home could sell for. A home equity line of credit or HELOC can also come in handy when you need an alternative resource to offset rising debts. HELOCs offer a stress-free way to get the money needed. Since your home secures the amount that you borrow, it\u2019s important to understand the process of using a HELOC to avoid financial trouble.<\/p>\n

What is a HELOC?<\/h2>\n

A home equity line of credit is a loan similar to a second mortgage. It is different only in that it functions as a credit card. The funds can be drawn by the borrower whenever needed instead of receiving them in a lump sum as is the case with other types of loans, such as home equity loans. While you can access the funds anytime you want during the \u201cdraw\u201d period, you cannot exceed the maximum amount set when you signed on the dotted line. You could borrow from your HELOC to pay for your child\u2019s wedding, and after you\u2019ve repaid the amount owed, you could borrow to buy a car. Much like with a credit card where you can borrow against your spending limit as needed, a HELOC allows you to borrow, repay and repeat.<\/p>\n

Some individuals confuse HELOCs with mortgage loans, but they are significantly different. A mortgage is used for only one purpose, and that is to finance the purchase of a home. The applicant never gets the money, because it\u2019s directly transferred to the seller – and for the most part one sticks to a repayment plan that normally stretches from 15 to 30 years.<\/p>\n

Conversely, HELOCs are revolving credit lines in which your home is the collateral against default. You are not restricted to using your HELOC funds for real estate needs. In this case, the money you borrow is secured by your home. Since a HELOC is a line of credit, you will be required to make payments only on the amount you actually borrow and not the full amount available. With a HELOC you may enjoy certain tax advantages versus other types of loans.<\/p>\n

How Do HELOCs Work?<\/h2>\n

Applying for a home equity line of credit in Santa Fe is somewhat like obtaining a primary mortgage. At Del Norte Credit Union, we\u2019ll ask you to provide similar information, including how much equity you have in your home, its appraised value, your credit score, employment status and outstanding debts. Our goal is to know the value of your collateral so we can give you an appropriate offer. Once you\u2019ve been approved, we\u2019ll give you a HELOC account card you can use for your line of credit.<\/p>\n

Reasons to Get a HELOC<\/h2>\n

A home equity line of credit is best used for home repairs and upgrades.<\/p>\n