Sometimes, major expenses are simply inevitable.
Houses need to be repaired, home improvements need to be tackled, and major expenses need to be financed. Our free eGuide “Understanding & Using a HELOC to Finance Your Next Big Project” addresses how a home equity line of credit (HELOC) might be the best option for financing these major projects.
HELOCs vs. Home Equity Loans
A HELOC and a home equity loan are both tools for homeowners who want to utilize the equity they have in their homes.
However, there are some key differences between the two:
- A home equity loan provides a lump sum of money, all at once, whereas a HELOC creates a line of credit that borrowers can draw from as needed over the course of time.
- Many HELOCs can use an adjustable interest rate or a fixed interest rate (depending on the lender), whereas a home equity loan is fixed.
The Flexibility of a HELOC
Flexibility is one of the most popular features of a HELOC. There are several different ways that HELOCs are considered flexible, ranging from how you can spend the money to how quickly you can start withdrawing from your approved HELOC.
HELOC funds can be used for anything.
Without a doubt, this is one of the biggest perks of a HELOC. You can literally use the funds for almost anything. General home improvement, major renovations, essential repairs, completing a college degree or getting a graduate degree, consolidating debt--these are just a few of the most common uses for HELOC funds.
Some uses are better than others, of course. Funding improvements to your house that will increase its value is a better use of your HELOC funds than spending it on the vacation of a lifetime.
HELOC funds are usually available quickly.
Getting a HELOC is generally a faster process than getting a mortgage. The basic steps, which you can read more about in our post on the HELOC timeframe, are:
- Gather all of the application documents together
- Apply for the HELOC with a qualified lender
- Get your home appraised (arranged by the lender, if necessary)
- Complete the closing process by finalizing all the paperwork and paying any closing costs or fees (if applicable)
Although it can be hard to predict the exact amount of time this will take, in many cases, a HELOC can be processed and closed in fewer than ten days.
You have control over some of the factors that go into your HELOC specifications.
There are a number of ways to make sure that your HELOC situation is right for you.
Your interest rate can be affected by your credit score, your debt-to-income ratio (DTI), and your home equity. Before applying, you can work on improving all of those numbers to ensure you get the best rate.
You can also wait to apply until you have built good equity in your home. The more equity you have, the more money you can access through a HELOC. Some homeowners work to consistently pay more than their mortgage payment every month so that they can build that extra equity faster.
We can help you finance your next project with a HELOC
WEOKIE offers home equity loans and HELOCs. If you are ready to get started on the HELOC process, we are waiting to hear from you.
Contact us today to set up an appointment. We’ll help you compare the various financing options available through WEOKIE, including a HELOC. Contact us at 405-235-3030 or 1-800-678-5363.
Don’t forget to check out our free eGuide below, which will answer many of your questions about applying for a HELOC, getting approved, and using your HELOC funds.
We look forward to hearing from you!
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