In life, we often face major home improvement projects, unexpected costs, education expenses, or the need to consolidate debt. That’s where a home equity line of credit (HELOC) can come in handy. At News Explorer Today, we want to help you understand what a HELOC is and how it can work for you.
Understanding HELOC
A home equity line of credit, or HELOC, is a line of credit that allows you to borrow against the available equity of your home. Your home’s equity is the difference between the appraised value of your home and your current mortgage balance. Through a HELOC, you can borrow up to a certain percentage of your home’s value, minus the amount you still owe.
Let’s say your home’s appraised value is $200,000, and you still owe $120,000 on your mortgage. If you can borrow up to 85% of your home’s value, you would be eligible for a maximum HELOC of $50,000.
Benefits of a HELOC
A HELOC works similar to a credit card, where you have a revolving credit line that you pay down. You only pay interest on the portion of the line you use. At News Explorer Today, we understand that financial flexibility is important to you. That’s why we want to highlight the benefits of a Bank of America HELOC:
- No closing costs, application fees, annual fees, or fees to use the funds.
- Rate discounts when you sign up for automatic payments.
- Discounts based on the funds you initially use when opening the HELOC.
- Preferred Rewards, which extends benefits to you as your qualifying Bank of America balances grow.
Additionally, the interest rate on a HELOC is often lower than other forms of credit, and the interest you pay may be tax deductible (consult a tax advisor for more information). Most HELOCs have a variable rate that can change over time based on the Wall Street Journal Prime Rate. However, Bank of America offers the option to convert a portion of your balance to a fixed rate, allowing you to take advantage of fixed monthly payments and protect yourself from rising interest rates.
Applying for a HELOC
If a HELOC sounds right for you, getting started is easy. You can give us a call, visit a financial center, or apply online here. Our dedicated team will guide you through the process and help you find the best solution for your financial needs.
FAQs
Q: How does a HELOC differ from a home equity loan?
A: While a HELOC provides you with a line of credit that you can borrow from as needed, a home equity loan gives you a lump sum upfront. With a HELOC, you only pay interest on the portion of the line you use, while a home equity loan requires you to make regular monthly payments on the entire loan amount.
Q: Can I use a HELOC for any purpose?
A: Yes, you can use a HELOC for various purposes, such as home improvements, debt consolidation, education expenses, or other major expenses. The choice is yours.
Q: How long can I borrow from a HELOC?
A: The borrowing period for a HELOC is typically 10 years. After that, you enter the repayment stage, where you’ll pay principal and interest on what you borrowed over a period of 20 years.
Conclusion
A home equity line of credit (HELOC) can be a valuable financial tool to help you achieve your life priorities. At News Explorer Today, we want to empower you with the knowledge to make informed decisions about your finances. If you’re considering a HELOC, reach out to Bank of America today and discover how it can work for you.
Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms, and conditions are subject to change without notice. All rights reserved. Bank of America, N.A., Member FDIC. Equal Housing Lender © 2022 Bank of America Corporation.