Bluestar Mortgage of Orlando, offers some of the mortgage industry’s best rates on HELOC Loans. Give us a call at 847-230-4030 to speak with a HELOC loan expert who can assist you in determining if a HELOC loan is the right option for you. You can also click on the schedule a free consultation button above.
About HELOC Loans
One of the most valuable assets in your financial portfolio is your home. But since your home is unlike a bank account, availability of worth can be difficult when you need significant expenses, such as a child’s education fee, refurbishment of your home, or consolidation of a huge interest debt into a single loan.
Thankfully, a loan option may grant you to obtain the cash you need. This option is called the home equity line of credit loan or a HELOC loan.
What is a Home Equity Line of Credit Loan?
A home equity line of credit loan is a second loan that permits homeowners to borrow money alongside the equity they have built in their home and obtain that money as a line of credit. Home equity is the distinction between the appraised value of your home and how much you still owe in your loan.
Qualifications for HELOC Loan
You will have to give the same information as when you initially purchased your home.
- Stable income: Most lenders require proof of income to verify your ability to settle your loan payments.
- Good credit score: Your credit score must be above the mid-600s to qualify for a loan. But an ideal credit score is above 700.
- Passing amount of your home: Must be at least 15 – 20% of your home equity.
- Reliable payment history: Lenders will assess your payment history to ensure that you do not have any late payments previously.
- Debt-to-income ratio (DTI): You should have a lower DTI to qualify. You can talk with your lender about the eligibility of the DTI ratios in obtaining a loan.
- Home and Property appraisal. This will be done to evaluate if you have adequate equity in your home to back up the requested loan amount.
Pros and Cons of a HELOC Loan
There are many reasons why HELOC Loan can be beneficial financial, but HELOC Loan features some risks as well. Below are the pros and cons to help you discern prior to HELOC loan application:
- Consolidating debt at a low-interest rate. A HELOC loan can be a valuable option in reducing your debts at a lower interest rate. You are only required to settle the interest on what you are presently borrowing.
- Flexibility. HELOC loans are versatile, to which the money can be used for anything you might need, such as college tuition fees or other education-related costs.
- Provides accessibility to a huge amount of money. Your most excellent choice for this is a second loan of any type that can be suitable for home improvements and upgrades that will significantly increase the worth of your home.
- Unlimited loan. In addition to flexibility, a HELOC loan permits you to borrow as much money as you need. This is especially beneficial if you are not certain how much money it will cost for your project or investment in the long run. And if at the end of your project, you do not have to be concerned about paying more than required in interest.
- Tax-deductible. Concerning your home improvement, a HELOC loan interest you pay may be deducted in tax once the funds are used to make home improvements.
- Get ready for the start-up costs. Prior to being paid with a HELOC loan, payment of an application fee, home appraisal, attorney fees, and title search may be mandatory. But in case you do not need to borrow a large sum of money, these added start-up costs are not worth it.
- Your home is collateral. Any moment you undertake a debt, there are risks, particularly the one that is connected with your home. Once you default on your HELOC loan payments, since your home acts as loan collateral, you can lose your home.
- Increase in rates and payments. You must also be aware of a possible increase in rate or payment subject to market fluctuation. Your funds may suffer once the rate increases or the draw period is done since you will have to pay interest-only to total costs. Be sure to handle your finances during uncertain times.
- Not necessarily the best practical choice. Using a HELOC loan for your day-to-day expenses such as groceries and utility bills is not a great option. It might seem like a regular credit card but remember that you are exchanging expensive equity for the borrowed amount from your HELOC loan.
It will be a great choice to only utilize your HELOC loan for projects or investments that will assist you financially. Such as home improvements that will bring up the cost of your home or for payment for higher education, or building up an emergency fund for unexpected expenses.
Connect with a Bluestar Mortgage HELOC Loan Expert
If you are interested in a heloc loan, call us at at: 847-230-4030 to speak with a HELOC loan expert who can assist you in determining if a HELOC loan is the right option for you.