Many families have been feeling they need more room to grow in their home, especially after nearly two years of being cooped up in said house more than ever before! Whether you are looking to renovate, add on, or even build your dream home, the next step toward that goal might be a HELOC from a trusted lender like Summit Credit Union.
What is a HELOC?
HELOC stands for Home Equity Line of Credit. A HELOC allows you to borrow against the equity you’ve built up in your home. Equity is the difference between what your house is worth in today’s real estate market and how much you currently owe on it. For example, if your home’s present appraised value is $225,000 and your outstanding mortgage balance is $75,000, you have $150,000 of home equity. If you’ve been in your home for any period of time, or if you made a substantial down payment when you purchased your home – you likely have built up a large amount of equity by now.
But what is it actually like to go to a lender, get a HELOC, and….use it? Is it complicated? How does it affect our monthly budget? How much are we actually able to get? How do we know if we are getting a good rate on a HELOC?
Our co-founder, Alisa, used a HELOC from Summit Credit Union recently and she joins us today to share more about her experience.
How does a HELOC work?
My husband and I always knew we wanted to build and in 2019 we found the lot/land that we wanted to build our dream home on. We were homeowners at the time, but had never built so this was new to us. We called Summit Credit Union to explore our options for how we would pay for the land and the home. We had a general idea of our budget – but had no idea how the process worked.
Our loan officer gave us a couple options and since he knew that we were homeowners – he suggested using a HELOC to purchase the lot outright. We had more than enough equity in our existing home to pay for the lot using a HELOC.
The HELOC process was extremely easy and hassle free — low to no closing costs with Summit and we were given a check for the amount we needed to purchase the lot. There also are a number of other reasons that people may find a HELOC beneficial.
Reasons to take out a HELOC
- Home improvements
- Debt consolidation
- Emergency expenses
There are a lot of benefits to having a HELOC and it’s a smart way for homeowners to make the most of their home equity. With a HELOC, you have access to a pool of money and only borrow what you need when you need it. At Summit Credit Union, they allow you to borrow up to 100% of your home’s equity (maximum loan amounts apply) and you can lock in your balance to a low rate for a term of up to 15 years.
Taking out a personal loan or using a credit card are also options – but often come with higher interest rates and longer lead times.
In many ways, a HELOC also works like a credit card, letting homeowners use the approved line of credit whenever they need it. Plus, if the amount you need comes in under the expected price, there’s no penalty.
Summit made it so easy for us to take out the HELOC, and to then take on a construction loan. If you are looking to remodel your existing home, need your equity for emergency expenses or simply are looking to consolidate debt – I highly encourage you to contact Summit Credit Union and to find out what your options are. You are in good hands with Summit!
Contact Summit Credit Union’s Loan Department
Summit Credit Union is an Equal Housing Lender.
1The Wisconsin’s #1 Mortgage Lender designation is based on the number of loans originated in 2020, gathered from the Home Mortgage Disclosure Act data compiled annually by the Consumer Financial Protection Bureau. The results of the data were obtained through the Consumer Financial Protection Bureau’s website: https://ffiec.cfpb.gov/data-