Navigating the real estate market in Salt Lake City can be complex, especially with financing options like a Home Equity Line of Credit (HELOC). The Stern Team, top real estate agents in Salt Lake City, explains what a HELOC is and how it works, ensuring you make informed decisions.
What Is a HELOC?
A Home Equity Line of Credit (HELOC) allows you to borrow against your home’s equity. Unlike a traditional mortgage, a HELOC offers a revolving line of credit instead of a lump sum.
How Does a HELOC Work?
A HELOC is based on your home’s value minus the amount you owe, allowing you to borrow up to 85% of your equity. You’ll get access to funds via a HELOC credit card, checks, or online transfers.
Draw and Repayment Periods:
Draw Period: Typically lasts 10 years, during which you can withdraw funds and make interest-only payments.
Repayment Period: Usually 20 years, during which you’ll make monthly payments on both principal and interest.
Benefits of a HELOC: Flexibility; Lower Initial Costs; Potential Tax Benefits
Qualifications: Lenders typically require a credit score of 680 or higher, a debt-to-income ratio of 40% or less, and sufficient home equity.
HELOCs are versatile and can be used for: Home improvements; Debt consolidation; Education expenses; Emergency funds; Large purchases
As the best realtors in Salt Lake City, The Stern Team offers expert advice on financing options like HELOCs. Our knowledge of Utah real estate ensures you make the best financial decision
