During the past weeks, the number of unemployment claims reached over 22 million. Americans continue searching for ways to recoup funds after suffering from lost work. As an answer to some, unlocking the hidden potential of their home has been the way to go. Could a HELOC strategy work for you, too? View all of the considerations to the process below.
What is a HELOC?
Keep in mind, HELOCs are different than Home Equity Loans. As part of a HELOC strategy, borrowing is flexible and functions as a revolving line of credit. Home Equity Loans, on the other hand, have fixed terms that do not change.
A Home Equity Line of Credit (HELOC) serves as a source of funds by allowing a homeowner to borrow against the available equity of their home. Homeowners use the money for home repairs, debt consolidation, or other financial emergencies.
HELOC rates vs. credit card rates
The average credit card interest rate is 20.71%, according to data collected by The Balance in March 2020. Majority of the time, the annual percentage rate of a Home Equity Line of Credit is much lower. Imagine, a better way to fill in the gap to pay for essential goods and services.
Those considering opening a HELOC with Achieva Credit Union will have a Variable Introductory APR as low as 3.25%*
*Promo APR in effect for the first 6 months. Thereafter, the qualified variable APR and monthly payment are subject to adjustment every 6 months based on movement of the index with the fixed margin varying from 0 to +4.75% over the variable index. As of 03/16/2020, the qualified variable APR at the first adjustment would be 3.75%.
– Achieva pays your closing costs
– Funds available when you need it
– No monthly, annual or transaction fees
– Payment only due with outstanding balances
– No PMI insurance requirements
How to apply for a Home Equity Line of Credit
Under normal circumstances, HELOCs are easy to qualify for, even if you have less-than-spotless credit. To qualify, you need to have available equity in your home, meaning that the amount you owe on your home must be less than the value of your home.
HELOC facts to consider
When a lender grants a home equity line of credit, they secure the borrower’s home as collateral. Additionally, those thinking of opening a HELOC should be careful not to accrue debts beyond their means, regardless of the interest.
The HELOC strategy puts the homeowner in control
The flexibility of a HELOC strategy, as noted above, is a plus. Homeowners borrow only the amount they need and only make payments on what they use. During the repayment period, homeowners pay in monthly installments that include principal and interest.
HELOCs have advantages for those who use them wisely. After comparing different methods of borrowing money, many homeowners prefer to use their home’s equity. Not only are the rates lower, but they can use the funds to condense their outgoing payments. When the current job market creates a loss of funds, the HELOC helps.
*APR = Annual Percentage Rate. The promo APR for a Home Equity Line of credit is the lowest available. Your qualified APR for the initial 6 months and beyond is determined by various factors and will be disclosed to you at final approval. At this time the fixed margin may vary from 0 to +4.75% over the variable index (Prime Rate as published in the Wall Street Journal on the 15th day of the prior month). After the initial 6 months, your qualified APR may adjust up or down based on the movement of the index but never more frequently than every 6 months and is limited to a maximum of 1% for each occurrence. The APR will never be lower than 3.75% and can never increase more than 6% over your qualified APR (maximum 18%). Interest rate adjustments may result in an increase in payment amount.
**Average closing costs on funded Home Equity Lines of Credit with Achieva Credit Union over the past 12 months averaged between $360.00 and $820.00. For Home Equity Lines of Credit equal to or greater than $100,000, Achieva Credit Union will contribute up to $650.00 towards closing costs at the time of funding