HELOC’d us up and threw away the key!

Here are seven handy facts to know about a Home Equity Line of Credit or HELOC:

First, the line of credit is a revolving account, like a credit card. You can borrow from the line whenever you’d like—and then you can pay the balance back and use it again.

Second, typically, the line of credit is only available for the first ten years of the 30-year life of the loan.

Third, the monthly payment that you are required to make is typically just enough to cover the interest charged against the average daily balance from the previous month.

Fourth, at the end of the tenth year, the minimum payment is increased to make sure the balance is paid off during the remaining term of the loan.

Fifth, there is typically an annual fee of around $100 to keep the account open.

Sixth, there’s a formula which determines how much of your home’s equity you can borrow against. The amount of the credit line is dependent on how much equity that you have in the home. Typically, you can borrow up to 90 percent of the equity in the home. (Remember that Equity = Value – Mortgage Balance.)

Seventh, and last, closing costs are usually pretty minimal.

If you have questions about a HELOC or any other mortgage questions, feel free to reach out. I’m happy to help. 602-525-9593, Christopher@SMALoan.net