As you build equity in your home, you start to see certain benefits, such as the possibility of opening a home equity line-of-credit (HELOC). This type of loan borrows against your equity to give you a credit limit which you can use at any time. Like a credit card, a home equity line can be used at any time, paid down and reused. A line can also be used for major purchases or home improvements and paid off slowly and comfortably with the minimum payment. Because this loan is secured to your home, it will usually have a lower interest rate than a credit card or a personal loan.
With a HELOC, Chelsea State Bank agrees to lend a maximum amount within an agreed period, or term, where the collateral is the equity in your home.
A HELOC can be used for anything you want. However, it’s best-suited for long-term, ongoing expenses. A Chelsea State Bank HELOC is a great standby for planned and unexpected expenses such as:
- Planned and unplanned home repairs and home improvements
- Debt Consolidation of medical bills, tuition payments, for example
- Backup emergency funds
The largest benefit of a home equity line of credit is the low interest-rate.
At Chelsea State Bank, a HELOC is offered in two periods: the draw period and the repayment period. Once you qualify for a HELOC, your loan terms will specify the terms and length of its draw period, which may last up to 20 years. Throughout your HELOC’s draw period, you can draw on your available line of credit as often as you need. During this time, you are required to make at least interest payments.
Once the draw phase is over, then principal and interest payments start. Payments are 1.5% of the principal outstanding at the end of each month. Minimum $100.
There are benefits of a home equity line of credit in comparison to personal loans, such us lower closing costs. Need more flexibility to use the equity already in your home? Apply for a Home Equity Line of Credit with Chelsea State Bank, or simply call us at 734.475.4210.
