The Advantages of a HELOC
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A Home Equity Line of Credit can provide homeowners an incredible amount of financial flexibility using the equity they’ve already put into their homes. While the terms of a HELOC can be flexible—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—the overall outcome is the same: once approved, borrowers can put that money toward whatever they want.
Here are a few other advantages of procuring a Home Equity Line of Credit:
Only borrow what’s needed. A HELOC does not give borrowers a lump sum of cash. Instead, it offers a homeowner the freedom to withdraw funds from the line of credit as needed.
Qualify for a low rate. Opening a HELOC now means qualifying for low interest rates on the line of credit. Most HELOCs have fluctuating interest rates, but some lenders allow for the possibility of converting large withdrawals into fixed-rate loans.
Flexible terms. Terms and repayment plans for HELOCs are generally flexible. 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 immediately, or over the course of 10-20 years.
Potential tax benefits. As per the Tax Cuts and Jobs Act of 2017, the interest paid on home equity loans and lines of credit is tax-deductible if the funds are used to buy, build or substantially improve the home of the taxpayer who is securing the loan.
Build a credit score. There’s no need for an excellent credit score to qualify for a HELOC, and on-time monthly payments can boost a homeowner’s score.
Low fees. A HELOC costs a minimal amount to establish. Annual fees, when they are applied, are also low— usually less than $100.
To find out how a HELOC could help you, visit ascend.org or call 800-342-3086 to speak with someone in consumer lending.