When pondering a remodeling project, adding a room to your home, or consolidating debt, a home equity line of credit may be a better option to use instead of a credit card(s). A HELOC (home equity line of credit) allows you to borrow only the money you need and offers a variable interest rate that is generally lower than credit card rates. Your payments will vary depending on the outstanding balance. Whether you want to consolidate debt or make renovations to your house, a HELOC is another option.
A HELOC uses your home’s equity as collateral. It does not replace the first lien mortgage, as it takes a second position. Generally, you can borrow up to 75 to 80% of the loan-to-value ratio in your home. This means that if you owe 60 percent or less of the value of your home on your current mortgage, you may be able to borrow 20% of the value through a HELOC.
Other reasons to use a HELOC over a personal loan or refinancing a mortgage is that you are only charged interest on the money you borrow. The HELOC functions much like a credit card, with a maximum amount that you can use over a period of time, and you can borrow against that amount as you need money. Once approved, you can access a portion of the credit line at any time. Again, a HELOC interest rate is usually less than most credit card interest rates.
With higher interest rates on mortgages and credit cards today, many consumers are finding the equity in their homes an advantage for remodeling, adding another room and consolidating debt…including credit card debt!
KCSB is here to help you determine the equity you have in your home! We have been helping individuals and families with their home buying, building and improvements for over 115 years now. We understand our customers and the neighborhoods in the communities we serve. At KCSB, you’ll meet one of our mortgage and HELOC professionals ready to help you apply for your loan and offer you financial advice, too. Get prequalified today!
Call us at 269.679.5291 or visit us online at https://kcsbank.com/mortgages/.
Kalamazoo County State Bank is an Equal Housing Lender.