What is a HELOC?
A Home Equity Line of Credit, commonly referred to as a HELOC, is a flexible financial tool offered to homeowners. It allows you to borrow against the equity you’ve built up in your home without changing your primary mortgage rate.
HELOCs provide a revolving line of credit rather than a fixed, one-time lump sum payment. This means you can draw from it as needed, much like a credit card, up to a pre-approved limit. HELOCs are an excellent financial tool that can give you flexible access to funds without tapping into other investments or assets.
The Benefits of a HELOC
One of the primary advantages of a HELOC is that you’re only charged interest on the amount you’ve drawn, not on the total equity available. Additionally, your payments each month will be interest-only, ensuring maximum financial flexibility. Here are some of the other key benefits and considerations:
01
Quick Access to Funds You Can Use For Any Purpose
Unlike a standard loan, a HELOC provides a quickly-available, revolving credit line. This means you can borrow exactly what you need, when you need it, reducing unnecessary interest payments. You have the freedom to use the funds as you deem fit — for any purpose.
02
Preserve Your Current Mortgage Rate
A HELOC does not alter or reset your current mortgage rate. For homeowners who locked in a favorable low mortgage rate, this ensures your great rate remains untouched. Access your equity seamlessly, without the need to refinance your primary mortgage.
03
Numerous Tax Benefits to Take Advantage Of
Interest on HELOCs, when used for home improvements, or to buy or build the taxpayer’s home, can be tax-deductible. This can reduce a homeowner’s taxable income, potentially saving money during tax season. Consult with your accountant to understand the full range of benefits associated with HELOCs.
04
Get Full Access To Your Untapped Equity
HELOCs are rooted in your home’s equity, often a substantial safe-haven of value. This enables homeowners to seamlessly fund sizable projects or expenditures, eliminating the need to rely on multiple loan avenues or deplete cash reserves. It’s about leveraging the wealth your property holds.
How Much Can You Borrow with a HELOC?
The borrowing limit for a HELOC primarily hinges on the equity you’ve amassed in your home. Through Cohen Financial Group’s strategic relationships, you can get up to 65% LTV (Loan-to-Value) financing for up to a $5M HELOC amount, and up to 90% LTV for lower HELOC amounts.
It’s worth noting that other factors, like credit score, and debt-to-income ratio also influence your HELOC borrowing limit. Brett McDonell and Cohen Financial Group can help you secure a HELOC with some of the best rates and terms available on the market — guiding you every step along the way.
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