As the holidays draw near, you may be considering how to use your remaining funds and if you want to continue to use your credit card(s) for expenses. This is an opportune time to consider your home’s equity to strengthen your finances and meet your financial goals as the new year approaches.
The three most common uses for a HELOC (Home Equity Line of Credit) are home improvements, debt consolidation, and covering major expenses or emergencies.
A HELOC 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 option to consider.
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.
When you use a HELOC over a personal loan or refinancing a mortgage, 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, paying for large medical bills or emergencies and consolidating debt…including credit card debt!
KCSB is here to help you determine the equity you have in your home and if it’s an opportune time to use it! We have been helping individuals and families with their home decisions for over 115 years. We understand our customers and the neighborhoods in the communities we serve. At KCSB, you’ll meet one of our mortgages 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.
Get prequalified today!