What Is a HELOC and How Can It Work for You?
With rising home values, many homeowners are sitting on a valuable asset: equity. One powerful way to tap into that equity without refinancing is through a Home Equity Line of Credit (HELOC).
Whether you’re planning a major renovation, need to consolidate debt, or want a financial safety net, a HELOC offers flexible access to funds—when you need them.
What Is a HELOC?
A HELOC is a revolving line of credit that uses your home as collateral. Unlike a Home Equity Loan, which gives you a lump sum, a HELOC works more like a credit card—you can borrow up to a certain limit, repay, and borrow again during the draw period.
Key Features:
- Variable interest rate (though some lenders offer fixed-rate options)
- Draw period (typically 5–10 years): You can borrow and repay repeatedly
- Repayment period (typically 10–20 years): You pay back what you borrowed with interest
Who Qualifies for a HELOC?
- To qualify for a HELOC, lenders typically evaluate:
- Home equity: You should have at least 15–20% equity in your home
- Credit score: 620 is usually the minimum; 700+ helps secure better rates
- Debt-to-Income Ratio (DTI): Ideally below 43%
- Income stability: Proof of steady income/employment
- Good payment history: A clean credit record helps
Why Consider a HELOC?
- Flexibility: Borrow as much or as little as you need, when you need it
- Lower interest than personal loans or credit cards
- Interest-only payments during the draw period (in most cases)
- Potential tax benefits if used for home improvements (consult a tax advisor)
Common Uses for a HELOC:
- Home renovations
- College tuition
- Debt consolidation
- Medical emergencies
- Starting a small business
- Emergency fund or financial cushion
This offer is made by Better Lending who is not an agency of the federal government, nor affiliated with your current lender. The loan information used in connection with this offer was derived from the credit bureaus (Experian, Trans Union and Equifax). This is not a commitment to make a loan.
*This is not a guaranteed offer, but an advertisement to lend. To qualify you will need to provide criteria including an acceptable property appraisal, and sufficient property collateral, as well as verification of personal income, sufficient credit history and clean property title. Not all programs are applicable to all borrowers and rates are subject to change at any time based on market conditions and borrower eligibility. This is not a commitment to lend. Nothing herein shall be construed as an offer to lend nor a commitment to lend, the above statements are examples of possible scenarios.
** Better Lending is not a government agency or affiliated with a government agency.
***All above interest rate scenarios assume a rate and term of refinance single family detached, owner-occupied residence with, credit score above 740, $300,000 loan amount, Loan-to-value ratio of 75 percent or less. $1495.00 for processing and underwriting fees, two discount points as of notice date, and the establishment of an escrow account. All the above rates and savings estimated are examples consistent with the prior description.
ⁱ Interest rate and payment scenario listed contains closing costs
⁺ Up to $500 credit applied as a lender credit towards appraisal at time of closing
V2019-11-26
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