This Insights article was contributed by Bill Scott, Corning Credit Union Mortgage Specialist.
The term HELOC stands for Home Equity Line of Credit, which is a loan for the maximum amount of money a lender will allow a homeowner to borrow, using their house as collateral. Sometimes referred to as a second mortgage, a HELOC is different from a conventional home equity loan because the entire amount is not given to the borrower up front. Instead, a HELOC can be used to take advances at the homeowners’ convenience, similar to a credit card.
Homeowners with a HELOC can use their pre-approved credit limit to borrow and use the advances for what is needed, when it’s needed. Advances are available over a certain number of years, referred to as a draw period, while accumulating interest as the borrower makes regular payments. A HELOC is often used for funding larger home improvement projects, but can also be used to cover a variety of expenses such as smaller home improvements, debt consolidation, vacations, and education expenses. It’s recommended to not use a HELOC to purchase depreciating assets such as automobiles, motorcycles, and campers. Whereas with a home, it’s one of the few assets that typically appreciates in value year over year.
While one of the biggest benefits to a HELOC is being able to draw funds when needed, there are additional advantages that often times make HELOC a better option over maxing-out credit cards or applying for personal loans. A HELOC is a secured loan, which usually offers lower interest rates than credit cards and personal loans. It can be helpful whenever a homeowner needs to finance or refinance anything carrying a higher interest rate. Additionally, homeowners interested in a HELOC may also have the benefit of introductory rates or special promotions that result in even more savings.
Corning Credit Union (CCU) has a team of experts ready to help you tap into the equity in your home. To learn more about CCU’s special offers, rates, and terms, or if you are ready to get started, click here.
Federally insured by NCUA. Membership eligibility required. Corning Credit Union is an Equal Housing Lender. Approval for financing subject to lending guidelines and credit qualifications.
As a member-owned, not-for-profit, independent financial organization, Corning Credit Union exists solely to serve our members. This means that every dollar invested in CCU is returned back to our members through better rates and lower fees on our high-yield checking account, auto loans, mortgages, and more. For more information visit us at www.corningcu.org.
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