Open a Home Equity Line of Credit (HELOC)
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Home Equity. It's a valuable asset.
Put yours to work for you with a home equity line of credit, or HELOC.
(Auditory Description: HELOC is pronounced HEE-lock).
A HELOC lets you tap into your home’s equity and borrow against it.
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You can use a HELOC for almost anything like home improvements, which can increase your home's value.
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A HELOC can also be used for paying down high interest debt, or for large expenses like medical or education costs.
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What's home equity? It's the current market value of your home minus the amount you owe your mortgage lender.
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With a HELOC, you can borrow against a portion of your total equity.
Typically, lenders allow you to borrow a total combined amount of 75 to 90% of your home's value.
To calculate your potential HELOC amount, simply subtract your outstanding mortgage balance.
Here's an example. A lender determines you can borrow against 80% of your home's value. Since your home is valued at $250,000, 80% of that is $200,000.
After you subtract your mortgage balance of $150,000 your potential HELOC amount is $50,000.
Your credit score and debt to income ratio also play a role in calculating your HELOC amount.
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A HELOC is similar to a credit card, because you can withdraw funds up to your limit.
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But unlike a credit card, a HELOC uses your home as collateral, so it's smart to borrow only what you need.
Some lenders may charge you fees to open a HELOC.
Having all the information can help you figure out if a HELOC will work for you.
Generally, you can choose a variable or fixed interest rate with a HELOC, depending on your situation.
Then you'll receive a revolving line of credit available for a set period of time, known as the Draw Period.
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During the Draw period, you make payments towards your balance, and you can draw funds up to your available limit.
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When the draw period ends, the repayment period begins and it's your responsibility to pay off the balance before the maturity date.
(Visual Description: Text shows: the Repayment Period Start at Year 10 with a line that connects to Repayment Period End at Year 20.
Think a HELOC may be right for you? We're here to help.
Reach out to discuss your home equity or visit truist.com/HELOC.
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Learn more at Truist.com/HELOC)
Disclosure: Truist Bank is an Equal Housing Lender and Member FDIC, Copyright 2021 Truist Financial Corporation. Truist, Truist Purple, and the Truist logo are service marks of Truist Financial Corporation.
