A HELOC, or Home Equity Line of Credit, is a type of home equity loan that works like a credit card. A line of credit allows you to add to your balance and pay off the card many times throughout the life of the loan. Unlike a regular credit card, you get a lower interest rate on a HELOC because it is attached to your home, and compared to a personal line of credit or credit card loan, those interest saving can add up fast.
Like any loan, you should never rush into choosing a HELOC without doing your research. It is important to find a HELOC with a large enough credit line for your needs and at a bank or other lender, you can trust. The most important thing to consider when it comes to a HELOC is the cost. You may run into two types of costs with a HELOC: interest rates and fees. The interest rate is the main cost of the HELOC and what you pay for borrowing on the line of credit. Some banks also charge application fees, new account fees, and other charges depending on how you use the account.
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