Who Should Consider Applying for a HELOC?
A home equity line of credit, also known as a HELOC, is a second mortgage you can take out on your home or rental property to give you emergency funds, an additional line of credit for improvements to your home, or funds for a one-time purchase. The amount of credit you are awarded is based on your home’s equity and the amount you have left to pay on your mortgage. If you own your home outright, you can even use this as your primary mortgage. While this type of loan may not work for everyone, there are many who could benefit from it.
Homeowners taking out a HELOC on a primary residence or investment property as well as those who have a desire to consolidate debt payments are just a few examples of people who should consider applying for a HELOC. Not only can this line of credit give you the funds you need for improvements to your home or rental property, but it could also help you pay off some of your debts without lowering your credit score. At Landmark National Bank, we are here to help you decide if a HELOC is the right choice for your financial situation. Continue reading to determine if you should consider applying for a HELOC, then check out our guide for applying for a HELOC.
HELOC on Your Primary Residence
A HELOC on your primary property is one of the best ways to receive a second mortgage for many different uses. The most obvious use for a HELOC on your property is to use it for home improvements and expansions. Whether you’ve been wanting to redo your basement for a while or you need to quickly prepare for a new addition to your family, a HELOC is a great way to make necessary repairs and expansions to your home.
Even though the credit is coming from the equity on your home, it does not mean you have to use the money just on your home. In addition to using the credit for home improvements, you can also use the money to consolidate your debt or head back to college. As long as you are able to make the interest payments and handle the payments once you enter into the repayment period, this line of credit can be extremely helpful for several financial needs.
HELOC on Investment Property
While the most likely choice for a HELOC is taking one out on your primary residence, you can also take a HELOC out on your rental properties. Even though this can be a risk due to the potential of losing your investment property, there are still several advantages to using your investment property as collateral. When you are approved for a HELOC, it only costs you money if you choose to spend it. This means you can have this HELOC to fall back on if something goes wrong.
You can also use these funds to make your property more appealing to renters by doing necessary updates and repairs. This will help you keep your assets productive and profitable. Also, the draw period for a HELOC tends to last up to 10 years, so the cash does not need to be spent right away. Keep the cash on hand until you need it, but make sure you are aware of when the repayment period begins.
HELOC and Your Credit
If you are looking for a way to consolidate your debt and lower your monthly payments, a HELOC is a great way to do it, as long as you have created a long-term plan for paying off debt. Using your HELOC to pay off any credit card debt you may have can even help you improve your credit score and allows you to qualify for better rates and terms on any future loans you may be applying for. The total amount of the available credit on a HELOC won’t impact your score, but if you consistently advance against the total, and your utilization is high, it could negatively impact your score.
However, it’s important to be aware that if your credit score is too low, you may not qualify for a HELOC. HELOCs generally require a credit score with a minimum in the mid 600s in order to qualify, so make sure you are checking your score frequently to ensure you meet that requirement.
Apply for a HELOC at Landmark National Bank Today
If you’ve decided a HELOC loan is the right choice for you, find your nearest Landmark National Bank and apply for one today. Our financial advisers are ready to help you every step of the way as we guide you through the application process, repayment plan, and more. Contact us today for more information or to apply for a HELOC.