Home equity lines of credit, or HELOCs, can be a great way to access the equity in your home when you need extra funds. If you are considering taking out a HELOC, here are nine things you should know:
- Spending flexibility. When you take out a HELOC, you can use the proceeds for anything you want!
- Access your equity. HELOCs allow you to have access to the equity you already have in your home. So, in one sense, you are just dipping into your existing assets.
- Provides easy access to money. When you are approved for a HELOC, you will have easy access to that credit line when you need it, providing peace of mind so you’re prepared for unexpected expenses.
- Pay down balance at any time. Your HELOC is a revolving loan, meaning that you can borrow and repay the balance any time, leaving the line of credit open for future spending needs.
- Only pay interest on the funds used. This is a big benefit, and is one major difference between a HELOC and a traditional loan. With a traditional loan, you borrow a fixed amount of money and pay interest based on that amount. With a HELOC, you can use as much, or as little, of the line of credit as you need, and you will only pay interest on the amount you actually use.
- Payments are interest + principal. With some HELOCs, payments are interest-only payments. When you take out a Mercer Savings Bank HELOC, your payments will be made up of both interest and principal, so you’re re-establishing your equity with every payment.
- Variable rate that is based on prime rate. Your Mercer Savings Bank HELOC will have a competitive interest rate that is variable and is tied to the prime rate.
- 10-year draw period followed by 10-year repayment period. Mercer Savings Bank HELOCs begin with a 10-year “draw” period, during which you can access your funds and make payments. After the end of the draw period, you’ll have a 10-year repayment period, during which you cannot access the line of credit anymore and instead focus on repaying any outstanding balance.
- Longer terms = lower payments. With longer draw and repayment periods than those offered by some other lenders, payments on a Mercer Savings Bank HELOC will be lower than they would be with shorter terms.
HELOCs may not be the best choice for every financing need, but they have advantages that make them attractive for many situations. To learn more about whether a HELOC is right for you and to apply for a HELOC through Mercer Savings Bank, contact us today in Celina, Ft. Recovery or Greenville.