22 Aug

What is a HELOC and How Can I Use It?

HELOC from RMLEFCU Denver, COHELOC is an acronym for Home Equity Line Of Credit. A HELOC is a loan set up as a line of credit rather than for a fixed dollar amount. For example, if you get a HELOC for $100,000 but only use $10,000 of it, you will only be responsible for paying interest on the $10,000, not necessarily your full line of credit. This is opposed to a traditional home equity loan where for example, if you take out a $100,000 loan you are responsible for paying interest on the entire $100,000.

In the Denver area, home values have risen considerably over the past few years. The supply of homes is not keeping up with the demand, which is driving home values higher and higher. Your home could be worth more than ever! This makes today’s economic climate an attractive time to consider using a HELOC for home improvements, college expenses, an emergency fund, and more. Currently, we are offering amazingly low rates based on the prime rate plus 0 points (based on current Loan to Value (LTV) and your credit history.) We even offer a convenient and easy way of accessing your Home Equity Line of Credit by giving you a HELOC Visa card. Learn more by calling 303-458-6660.

Here are 4 great reasons to take advantage of a HELOC:

  1. Home Improvements – One of the most popular uses of a HELOC is for Home Improvements. This was the main reason HELOCs were created in the first place. Making home improvements is a great way to use your home’s equity to improve your home while also increasing its value. With such a low interest rate, in many instances, the improvements you do to your home will produce a nice little return on your investment.
  2. Consolidate Debt – If you are currently carrying a lot of debt, a HELOC could likely save you a lot of money because of our low interest rate. For example, if you are paying 13-20% interest on a number of credit cards, you could get a HELOC at a lower APR*, pay off the cards (consolidate your debts), and save a considerable amount of money in interest each month with 1 single HELOC payment. Please use caution with this strategy. If you are the type of person that will likely use the extra credit freed up with the HELOC and increase your debts, we would not advise this strategy. Please remember that a HELOC uses your home as equity. If you default on payments you will risk losing your home. A better option may be to do a credit card balance transfer. Please see our previous article on balance transfers and check out our current promotion.
  3. Pay for Education – Student loans can carry very high interest rates. In many instances a HELOC makes sense to pay for college because it typically carries a lower interest rate. Since a HELOC is a line of credit, you can borrow as needed as tuition and expenses may vary. HELOC loans are tax deductible as well.
  4. Purchase a Car – If you need a new vehicle, a HELOC could be a good option to help you pay for it. Each month you can use the HELOC to draw money for your car payment or use it to buy your car outright. Typically we would only suggest this option if you were in dire need of a new vehicle. Currently we are offering auto loans as low as 1.99% APR* which is a much better rate than you will get with a HELOC if you can keep up with the monthly payments.

We hope you found this article helpful and informative. Please call 303-458-6660 for more information on HELOCs and to take advantage of our incredibly low rates.

*Annual Percentage Rate. With approved credit. Some restrictions may apply.

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