Compare HELOC Rates

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1 What can I use a HELOC for?

A HELOC can be used for nearly anything that you would typically use a credit card for. Essentially, it is a revolving credit line that uses your home’s equity as collateral.

However, common reasons to use a HELOC include debt consolidation, home repairs, major medical bills, education and other major expenses. Day-to-day expenses are not usually paid for through a HELOC.

Depending on the lender, you may be able to access your home equity credit line through checks, online banking, telephone banking and/or a card linked to the HELOC.

2 When do HELOC rates change?

Most HELOC rates vary in the same way that credit card APRs vary. HELOC rates are usually determined by the prime rate, plus a fixed rate that changes depending on your creditworthiness.

The prime rate is a benchmark rate used by the financial industry and it fluctuates based on the federal fund rate, which is set by the Federal Reserve. When interest rates are on the rise, you can also expect rates on all credit lines, including HELOCs, to rise as well.

3 Are there tax advantages to having a HELOC?

A major benefit of a HELOC is the ability deduct interest paid on borrowed funds, much like a mortgage. However, there are limits to how much interest you can deduct during tax time, depending on how you used your HELOC funds.

Interest is tax deductible on up to $1 million if funds are used to purchase or improve your home. For non-home-related expenses, interest is deductible on up to $100,000. Additionally, you cannot deduct more than the home’s fair market value.

The tax advantages of using a HELOC may seem attractive, to the point where it would seem unwise to not use it for all expenses. However, remember that a HELOC is secured by your home -- failure to repay your HELOC may put you in danger of losing your home.

4 Are there tax advantages to having a HELOC?

Deciding to agree to a HELOC is a major financial decision. And you should weigh your options carefully first. There are benefits to HELOC over other financing options, which you should consider including: current low prime rates vs. other loan types, possible tax deductions for HELOC repayments, and access to major financial demands (i.e. home improvements, university fees, weddings, etc.)

Comments & Questions

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Thursday, 29 Sep 2016 8:30 PM
<p>You will be able to withdraw to 80% of equity, which in this case is about 30%. (100K Value : 50K-loan 50K-Equity:::: 100Kx80%= 80. 80-50(loan) = 30%). Process gets much complicated with legal process. You may be able to get approval, but must go though bank's legal underwriting and takes much longer time for approval.</p>
Thursday, 29 Sep 2016 8:22 PM
<p>You need to satisfy three categories for heloc approval. DTI (debt to income ratio), LTV (Loan to Value ratio) and credit score. Your LTV and credit score are satisfied, but income (most banks approve DTI below 43%-50%) is need for you to at least apply for Heloc. Most banks will require 2yr W-2 and most recent paystub.</p>
Tuesday, 20 Sep 2016 2:16 AM
<p>I own 50% of an investment property. The other 50% will begin a probate process shortly. I would like to obtain a HELOC for 50% of the equity(which would be my 50% anyway). Can I still get a HELOC eventhough the estate of the other 50% is about to start probate?</p>
Wednesday, 14 Sep 2016 2:49 PM
<p>Can I get a heloc if I do not have a job, however my home is paid off and credit score is 821</p>
Wednesday, 01 Jul 2015 8:25 PM
<p>You should be able to use either as collateral for your HELOC. However, with a credit score of 650, you may have trouble qualifying for a HELOC. If you do, you may not get the lowest interest rate. I suggest that you take some time to boost your credit score before applying.</p>
Wednesday, 01 Jul 2015 5:22 PM
<p>I have 2 homes paid off. credit score of about 650.00 .can I use either home to apply for the heloc??</p>