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HELOC – Here’s What You Need to Know

Home Blog HELOC – Here’s What You Need to Know
HELOC – Here’s What You Need to Know

A home equity line of credit (HELOC) is a great way to fund large expenses using the equity you have built up in your home. What is a HELOC you may ask? Keep reading as we outline what it is and the benefits of having one set up. Let’s get started! 

Let’s Begin with Home Equity 

Home equity is the difference between your home’s market value and the amount that you owe on your mortgage. Both a home equity loan and a home equity line of credit allow you to borrow against this equity. With a home equity loan, you borrow a specific amount and make regular payments during a fixed repayment period. A home equity line of credit is a bit different. Unlike a conventional loan, a HELOC is something you establish ahead of time and use when and if you need it. In a way, it’s like a credit card, except with a HELOC, your home is used as collateral rather than being unsecured. 

A home equity line of credit has a credit limit and a specified borrowing period. During that period, you can withdraw money up to your credit limit whenever you need it. If you don’t need the funds, the HELOC just sits there at no cost to you. You can use the HELOC funds when you need them and can continue to reuse the funds as you repay them. Once the term of the HELOC ends, you’ll repay the remaining balance with interest just like a regular loan. If you need cash and you have equity built up in your home, a Home Equity Line of Credit is a great solution offered by Peoples Bank of Kankakee County. 

What Are HELOCS Used For? 

Your home may be the most valuable asset you own. Borrowing against your equity may be a great way to free up cash for any number of purposes. You might access cash for: 

  • Home remodel projects 

  • College tuition or higher education 

  • A new vehicle, motorcycle, or RV 

  • Building a deck or pool 

  • Wedding or travel expenses 

  • Consolidate high-rate debts into a single loan 

  • Cover emergency expenses 

  • Almost anything – you decide! 

Benefits of a HELOC 

There are many benefits to utilizing a Home Equity Line of Credit

  • A Home Equity Lines of Credit tends to have a lower interest rate than credit cards, making it attractive for debt consolidation. 

  • A HELOC is a revolving source of funds you can access as you choose, making it attractive for ongoing projects. 

  • Closing costs are low or non-existent. 

  • A HELOC allows you to borrow in lesser amounts so that you’re only borrowing what you need when you need it. Borrowing only what you need can keep your interest and monthly payment low and lets you avoid unnecessary debt. 

  • Interest might be tax deductible up to a certain threshold if you use the money for home improvements (consult your tax advisor). 

  • Your HELOC will have a maximum interest rate cap, so even if interest rates rise, you have some protection. 

  • You can pay back what was borrowed whenever you like. For example, if you need a short-term loan as you’re waiting for some money to come in, you could take a draw on your HELOC, pay interest for a short term, and then pay off the balance once you receive your funds. 

  • Adding a HELOC to your credit portfolio and making regular on time payments could potentially boost your credit score. 

Benefits of FlexLine 

At Peoples Bank, we understand life comes with many unplanned expenses. Our FlexLine Home Equity Line of Credit is an easy way to finance your life. FlexLine offers: 

  • 0% APR for 90 days 

  • Then variable rate of 5.40% or lower* 

  • NO PAYMENTS for 3 billing cycles* 

  • NO CLOSING COSTS* 

  • Draw from your FlexLine when you need it - just write a check 

FlexLine really is the best Home Equity Line of Credit in town. If you would like to connect with a lender to learn more about it, visit our website or stop in today! 

*Introductory rate of 0% Annual Percentage Rate (APR) is fixed for the first 90 days. After 90 days, the following variable rates would apply: 4.45% APR for line limits of $100,000 or more; 4.95% APR for line limits of $50,000 to $99,999; and 5.40% APR for line limits of $25,000 to $49,999. The floor is 3.75% APR with a ceiling of 18% APR. The APR will vary based on the U.S. Prime Rate as published in the Wall Street Journal +/- a margin. The margin is based on your total line limit. As of July 28, 2022, the Prime Rate was 5.50%. The minimum line of credit to receive the introductory rate and qualify for no closing costs is $25,000. HELOC must be new money to the bank. For requests under $25,000, other HELOC options are available. Collateral cannot be classified as a manufactured or mobile home. Owner-occupied primary residence only. Homeowners insurance is required. Minimum payment may result in a balloon payment at maturity. Rates and APRs are subject to change without notice. Subject to credit approval. We reserve the right to discontinue this offer at any time. Other terms and conditions may apply. Please call for details. 

 

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