HELOCs, or Home Equity Lines of Credit are available to borrowers who hold equity in their home. The Line of Credit is put in place, and the customer can either fully drawn down on the loan amount at closing, or they can leave it completely untouched, and only use the loan when needed or in an emergency situation. Often times we tell people, when most people really NEED a line of credit, they do not qualify for it, so we try to recommend setting one up even if you do not immediately need the funds and are already in good financial standing.

HELOCS, or home equity lines of credit usually will carry an adjustable interest rate that is based of the Prime Rate index. Usually when you hear things in the news about the Fed, Federal Reserve, increasing the interest rates, Prime is what is affected and Prime is the index that is being increased. This means that the rate on your home equity line of credit will increase as well.

Some HELOCs come with a fixed rate option. If the fixed rate feature is available, you may lock your interest rate anytime after funds have been disbursed. The fixed rate only applies to the utilized portion of your HELOC. Additionally, this featured may be used more than once.

You can obtain a HELOC with a draw or without a draw. For example, if you take out a $25,000 HELOC on a draw, that means the whole $25,000 is disbursed to you and you are paying interest on that amount. You can also set up a HELOC without a draw for emergencies. You will only be charged interest on the amount of money you draw off of your HELOC which is nice because you can have the HELOC set up for emergencies without having to pay interest on the amount.

Home Equity Lines of credit are generally offered up to 100% of your homes value. Although the higher you go the higher your interest rate is going to be. Most advertisements you hear regarding HELOCS are assuming 80% LTV.