Home / HELOC
Home equity
Borrow what you need, when you need it, and pay interest only on what you use. A smart way to fund a new roof, a renovation, or tuition without refinancing your first mortgage.
A home equity line of credit (HELOC) is a revolving line of credit secured by your home. You can draw from it as needed, repay it, and draw again, much like a credit card with a much lower rate.
Most HELOCs have a draw period of about 10 years, when you can borrow and often pay interest only, followed by a repayment period of about 20 years.
Most lenders let your mortgage plus your HELOC reach 80% to 90% of your home's value. For a $400,000 home with a $210,000 balance at 85%, that is a line of about $130,000.
Your credit score, income, and the property type set where you land in that range. The calculator below runs the numbers for your home.
If your current mortgage rate is lower than today's rates, a HELOC usually wins because you keep that rate and borrow only the extra. A cash-out refinance makes more sense when you can also lower the rate on your first mortgage.
Brian will compare both, including closing costs and the blended rate, before you decide.
Anything you like, but the smartest uses add value or lower costs: renovations, a FORTIFIED roof, impact windows, paying off high-interest debt, or education.
On the Alabama coast, hurricane hardening can pay you back. Alabama law requires insurers to offer premium discounts for homes built or retrofitted to the FORTIFIED standard, and Brian knows those programs from his inspection and insurance work.
Calculator
Estimated line = home value × maximum combined loan-to-value, minus your mortgage balance. Estimates only; the final line depends on appraisal, credit, and income. HELOC rates are variable and can change.
Is this a fit?
Be ready
Questions people ask
HELOC interest may be deductible when the money is used to buy, build, or substantially improve the home that secures the loan. Talk with a tax professional about your situation.
Applying creates a hard inquiry, which can lower your score slightly for a short time. Keeping your balance low relative to your line and paying on time helps your score over time.
Some programs offer HELOCs on second homes and investment properties, usually at a lower maximum loan-to-value. Ask Brian what is available for your property.
Many HELOCs close in about two to four weeks, depending on whether a full appraisal is required.
The HELOC balance is paid off from your sale proceeds at closing, just like your first mortgage.
Find out your line amount and payment without touching your current mortgage.
Compare
Fixed-rate loans with as little as 3% down for first-time buyers.
Learn more →Veterans$0 down and no monthly mortgage insurance for those who served.
Learn more →Rural and suburban$0 down in eligible areas for moderate-income households.
Learn more →Rental propertyQualify with the property's rent instead of your tax returns.
Learn more →