May 30, 2018
Did you know that your home could be a source of funds when you need major home repairs or upgrades? Your home’s current market value minus what you still owe on your mortgage is what’s known as your equity. If you’re lucky and that figure is positive, you can tap into it with a Home Equity Line of Credit (HELOC) from LUSO Federal Credit Union, a type of variable rate home loan that functions like a credit card. You can draw from your HELOC – up to 90 percent of value* – and pay it down each month. As you pay off the principal balance, your credit revolves and you can use it again.
How to know if a HELOC is right for you …
Upgrading your central air-conditioning system, installing new windows, or replacing the siding on your house? A HELOC can be a great financial resource for homeowners who are completing expensive home maintenance or renovation projects, especially if those projects increase the value of your home. And did you know that it can also be used to pay for a looming college expense, or to pay down outstanding credit card debt, etc.?
A Home Equity Line of Credit from LUSO has many benefits, including:
- A draw period of either 5 or 10 years, followed by a fixed repayment period
- The ability to fix a portion of the line during the draw period
- No prepayment penalties**
- No first mortgage requirement to obtain a HELOC
Managing your HELOC …
As with any line of credit, it’s important to manage your HELOC wisely. Compared to a first mortgage, a HELOC is a great way to borrow a small amount for a short time. For example, you can borrow $20,000 that you plan to repay within three or five years. The interest rate may be lower than the rate on a second mortgage, and you’ll only pay interest on the amount that you borrow at various times.
It's also important to understand all the requirements of a HELOC. First, there is an annual maintenance fee of $25. And if your interest rate is variable, your payments may rise. But to offset a rising rate, we offer the option to fix a portion of your HELOC at any time during your draw period; if the prime rate increases, you can contact an originator and request that LUSO fix your line for a set term (the term would be determined by how much time is left on the HELOC).
If you’re wondering whether a HELOC is the right choice for your specific needs, contact a LUSO loan originator at (413) 589-9966 to discuss your options.
*Restrictions may apply.
**Unless line is closed within first 24 months