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Home Equity Line of Credit

Turn Your Home Equity into Opportunity

What is a HELOC?

Your home has likely built value over time. A Home Equity Line of Credit (HELOC) is a flexible credit line secured by your home that allows you to borrow against the equity you've built. It allows you to access equity and use it for renovations, debt consolidation, major purchases, or unexpected expenses without refinancing your first mortgage.

Instead of receiving a lump sum, a HELOC works more like a credit card. You are approved for a credit limit and can borrow funds when you need them during the draw period. You only pay interest on the amount you actually use. This flexibility makes HELOCs a popular option for homeowners who want access to funds while keeping their existing mortgage intact.

Why Homeowners
Use a HELOC

Homeowners often use a HELOC to turn their home equity into a financial tool. Common uses include:

  • Upgrade your kitchen, remodel your bathroom, or complete projects that improve comfort and value.

  • Use lower-interest equity to pay off high-interest credit cards or personal loans.

  • Use equity to Bridge the Gap to your next home

  • Medical bills, tuition, or unexpected financial needs.

  • A HELOC can serve as a flexible backup source of funds without touching savings.

  • Vehicles, travel, or other major expenses.

How Does a HELOC Work?

Most HELOCS operate in two phases:

 

Phase 1:
Initial Draw Period

During the draw period, you can borrow from your credit line whenever you need funds. Many HELOCs allow interest-only payments during this phase, providing flexibility in monthly payments.

Phase 2: Repayment Period

Once the draw period ends, the loan moves into the repayment phase where both principal and interest are repaid.

What makes a HELOC Different From Other Loans?

A HELOC can be a powerful tool, especially when it offers flexibility. Key features include:

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No Need to Refinance Your First Mortgage

Keep your existing mortgage and rate intact.

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Interest-Only Payments During the Draw Period

Provides flexibility while you access funds.

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Standalone or Piggyback Option

Can be used with a purchase loan or as a separate second lien.

 

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Flexible Qualification and Generous Limits

Loan amounts up to $750,000 with high combined loan-to-value limits.

 

Comparing a HELOC with a Cash-Out Refinance and an Equity Loan 

Homeowners have several ways to access the equity in their home. The best option depends on your goals, your current mortgage rate, and how you plan to use the funds.

Here’s a quick comparison of the three most common options.

HELOC
Cash-Out Refinance
Home Equity Loan
How Funds are Received
Credit line you draw from as needed
Lump sum at closing
Lump sum at closing
Interest Rate Type
Typically variable
Usually fixed
Usually fixed
Effect on Existing Mortgage
Keeps your current mortgage
Replaces your current mortgage
Keeps your current mortgage
Payment Structure
Interest-only during draw period, then principal + interest
Principal and interest payments
Principal and interest payments
Flexibility
Very flexible. Borrow only what you need
Less flexible. Full loan amount issued upfront
Fixed amount borrowed upfront
Best For
Ongoing expenses or projects
Large one-time expenses
Predictable payments
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Download Our Free
HELOC Guide

Understanding how to use home equity wisely can make a big difference in your financial strategy. Our guide, “Tapping Into Your Home’s Potential: A Smart Guide to Using a HELOC,” explains:

How a HELOC works
Smart ways homeowners use equity
When a HELOC may make sense
What you need to qualify
Frequently asked questions about HELOCs

Want More Information?

You can use you home equity for many things! Watch these videos to learn how.

Ready to Unlock Your Home’s Equity?

A loan advisor can help you understand how much equity you may be able to access and whether a HELOC fits your goals.

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