HELOC

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What Can a Home Equity Line of Credit Do for You?

If you are a homeowner, a Home Equity Line of Credit (HELOC) may be worth considering if you need access to funds to pay for large expenses, such as home improvements or repairs, debt consolidation, college tuition, unexpected medical bills, or that once-in-a-lifetime trip you’ve been dreaming about. A HELOC allows you to borrow against the equity in your home, which is the home’s current value minus the amount you owe on your mortgage. HELOC loans also offer flexibility by letting you draw only the amount you need from your line of credit, and then repaying that amount over time.

Getting approval for a HELOC is similar to the requirements needed to refinance your mortgage. In deciding whether a home equity line of credit is right for you, there are benefits and costs to consider if you choose to unlock the power of your home.

Benefits:

· Borrow only what you need.

Most often, a HELOC allows you to borrow up to 85 percent of your home’s value, minus outstanding mortgage payments. With a HELOC, you can use funds as you need them, only borrowing the cash you need as you go. If you wind up needing less than you thought, you’ll end up with a smaller monthly payment.

· Qualify for a lower Annual Percentage Rate (APR).

HELOCs can have lower interest rates and lower initial costs than credit cards, which makes them attractive for debt consolidation, college expenses, home improvements, and more.

· Interest may be tax deductible.

You may be able to deduct amounts you paid for interest on a HELOC. Visit IRS.gov for more details or consult with a CPA or tax advisor.

Costs:

· Reduced equity in your home.

When you borrow through a HELOC, you’re borrowing against the home equity you may have accumulated. Having an outstanding HELOC also limits future opportunities to borrow from your equity.

· Variable interest rate.

Most HELOCs are financed with a variable rate. This means that your rate can go up or down based on the decisions of the Federal Reserve. So, even if you have a HELOC with a low variable rate now, you could experience rising rates over the life of your loan. Ask your lender to be sure you understand the terms of your loan.

When considering if a HELOC is right for you, it’s important to work with a lender you trust. Our local, knowledgeable team members at First Commerce Credit Union will take the time to understand your financial goals and provide options that work for your budget.

Learn more at FirstCommerceCU.org/HELOC

*First Commerce does not provide tax, legal or accounting advice. The information on this page is for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your tax, legal or accounting advisors for further guidance. Insured by NCUA. Loans subject to approval. Equal Housing Opportunity Lender. NMLS #774895