Home Equity Lines of Credit, or HELOCs, can be a great source of funding for just about anything you need. It allows you to draw on the equity you already have in your home when you need cash. If you are considering applying for a HELOC, you probably want to learn more. And, as with any financial decision, it is helpful to evaluate the “pros” and “cons” of using a HELOC before making loan decisions.
- Fast closing time. Because you are borrowing against your own equity when you take out a HELOC, it’s possible to close on your loan very quickly, often in a matter of days and not months.
- Lower costs than conventional mortgage loans. Both closing costs and ongoing interest are generally lower with a HELOC than they are with conventional loans.
- Provides easy access to money. Your approved credit line is there for you with a HELOC, so when you need it, it’s easy to access.
- Spending flexibility. With a HELOC, you have the flexibility to use your equity however you want, and you will only pay interest on the money you actually borrow.
- Constant access to funds. One of the biggest draws of HELOCs is that you have continual access to your line of credit. So you can use it, pay it off, and then use it again during the 10-year draw period without reapplying.
- Reduced equity. Because you are borrowing against the accumulated equity in your home, that means your equity will go down-at least as long as you have an outstanding balance on your loan.
- Not best option for borrowing small amounts. If you do not need to borrow a lot of money, then there may be better options instead of borrowing against your home equity. Although closing costs are lower than those you might expect to see with a conventional mortgage, you will still have an up-front expense with a HELOC that may not be worth it if the amount you need to borrow is small. Explore your options by talking to a banker.
For more information about the many benefits of HELOCs, see this recent blog post.
To find out more about HELOCs and to learn why Mercer Savings Bank has been a trusted community bank for more than 125 years, visit us in Celina, Ft. Recovery or Greenville, or contact us online today.