Money you didn't even know you had.
For homeowners, receiving that inevitable mortgage statement each month is almost as dreaded as paying taxes. But the good news is that with each payment you make, you're building up what is known as "equity." Equity is the appraised value of your home minus what you owe on the mortgage. Typically, the less you owe on your mortgage, the more equity you have in your home.
The better news is that your equity can be used as collateral against a Home Equity Line of Credit, in the event you need money for a home improvement project, to pay college tuition, or a host of other reasons.
A Home Equity Line of Credit provides you with a certain amount of money (much like a credit limit on a credit card) from which you draw as you need it. And, the benefit here is that you only pay interest on the amount you've drawn versus the entire amount available to you.
As an example, let's say you're hiring a contractor to help you with a home improvement project. You estimate the renovation will cost around $25,000 so that is the home equity line of credit you apply for.
Now, let's suppose the contractor only needs $10,000 to get started. Interest will only be charged on your initial draw of $10,000 instead of the whole $25,000. Now let's say the contractor finds a way to do the whole job for less than expected (wouldn't it be nice if that ever happened?) and you make another draw of $10,000 to finish the project off. You'll only be charge interest on the total draw of $20,000 rather than $25,000.
Convenient, yes? That's just one of the ways we work hard to keep more money in your pocket.
Home Equity Line of Credit benefits include:
- Competitive, variable rates on the loan amount you actually use
- Flexible draw periods
- Generous repayment terms
- No prepayment penalty