How A HELOC Can Better Help You With Your Home Improvements
What Is A HELOC?
A HELOC is actually a type of second mortgage. An account is opened for you that allows you to get the cash you need. The equity you have in your home, and how much you apply for determine the amount of cash available. The lender will look at your credit report and ability to pay back the mortgage in order to give you a credit limit. Access to the cash is usually given by a credit card or checking account.
How Does It Work?
Instead of giving you the cash of the HELOC in one lump sum, it is put into your account and you are able to draw it out as you need it. There is generally a minimum draw that will need to be made, and a period established during which you can make the draws. This period can be up to about 11 years.
You have the choice about how much and when you want to draw out the money you need for your home improvement projects. If you choose not to use all of it, then that is up to you.
How Are Payments Made?
Payments are made on the interest as you go along. The nice thing here is that you only pay interest on the amount you actually use. Whereas, on a home equity loan, or any other type, you are paying interest on the total amount borrowed. So, if you do not choose to use the whole amount, then that means savings for you.
How Does It Amortize?
A HELOC will usually amortize in one of two ways. The first way is that you start making amortizing payments when the draw period ends. The whole term of the HELOC could be from 15 to 30 years, and the number of years after the draw period is how long you have to pay it off. A second way is that the whole amount may become due at the end of the draw period - as a balloon payment. This would require refinancing in most circumstances. At the end of the repayment, you may or may not have the credit extended to you again - depending on the agreement.
What Other Details Are There?
A HELOC is usually an adjustable rate mortgage. While some are now starting to be offered as a fixed rate mortgage - most of them are not. You should also be aware that the interest rate is calculated daily in most cases. In addition, there is a "margin" that you need to find out about before you buy.
Making your home improvements with a HELOC can be a great way to tap into your home's equity. Adding value to your home is a great way to use your HELOC funds, and it is also tax deductible.
Related Tags: mortgage, equity, home, house, refinance, second, improvement, diy, heloc, own
Joe Kenny writes for Rebuild.org, offering online home equity loans along with some great mortgage loans in the site.
Visit today: http://www.rebuild.org/
Recent articles in this category:
- Payday Installment Loans: Ideal Funds That Supports Your Impending Needs
Any impending monetary crisis will be tough to deal with, if you are not having adequate funds. Neve
- Educational Loans -helps To Secure Bright Future
Education is said to be the most important thing in ones life. It not only helps to improve the stan
- One Hour Payday Loans No Faxing - Fastest Option Of Acquiring Money
Nowadays, loans have become a common thing among the UK people as needs are rising while the salary
- Tenant Loans - Instant Monetary Support For Non Homeowners
Are you looking for an unsecured financial help that does not demand security to place against the r
- Payday Loans No Faxing - No Verification And Delay
So many times, the approval of the loan gets delayed due to the lengthy paperwork and documentation.
- Bad Credit Car Loans -helps You Finance A Car
Are you in need of a new car? Here bad credit car loans can offer you finance as you need. Perhaps y
- Logbook Loans - Friendly Deal For Car Owners
Everyone knows that logbook is a paper issued by driver and vehicle licensing agency. This important
- Same Day Loans For People On Benefits - Quick Money For Instant Financial Hold
Urgent and unpredictable demands might arise at times when you are not financially prepared. To deal
- 3 Month Payday Loans - Feel Free With Longer Repayment Option
Are you looking for the loan that can give you small cash, but for longer duration? Are you worried
- Loans For Bankrupt People - Look Forward For Financial Stability
Financial acronym or injury and inability for reimbursement to the concerned are known as insolvency
Most viewed articles in this category:
- Unsecured Personal Loans - Loan for the Common Man
Loans can broadly be divided into two types - unsecured loans and secured loans. Secured personal lo
- High Risk Unsecured Personal Loans at Nominal Interest Rate
Today, unsecured loans gave grabbed the market as more and more people are opting for it. The loan m
- Personal Loans-Don't Suppress Your Financial Needs
Personal loans can be segregated into a secured and an unsecured loan option. If you are a homeowner
- Take the Loan; Show No Reason
If you are in need of a loan and want to utilise it for any purpose without showing the reason to th
- No Compromise With Your Pleasure, Have Your Own Car
On a fine morning, you get up to see the sun shining brightly in the sky, leaving the world bathed i
- Subsidized And Unsubsidized Student Loans!
These loans carry different loan terms and different requirements. According to the student situatio
- Interest Rate: The Key Factor on Car Loans!
There are such wide variations in APR between lenders that you can end up overpaying on your car loa
- Fight Against Tight Financial Situation With Personal Loans UK
It is always better to prepare yourself for unforeseen or unexpected expenses. If you are not born w
- Advantages And Disadvantages Of Lack Of Security On Loans!
The unsecured nature of these loans attracts tenants but homeowners as well. However, in order to de
- Unsecured Personal Loans-A Loan Everybody Is Eligible To Procure
Unsecured personal loans cater to urgent day-to-day financial requirements, and have become very pop