Home Equity Lines of Credit (HELOC)

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A home equity line of credit is a revolving form of credit that uses your home as collateral. If you’re a qualified homeowner with available equity, a home equity line of credit can provide you with:

Secured financing based on the equity in your home, which typically results in lower interest rates than many unsecured forms of credit.

A revolving source of funds that you can borrow against and pay back as many times as you’d like during the draw period.

Potential tax benefits: The interest on your home equity financing may be tax deductible. Consult your tax advisor regarding deductibility of interest.

• You will have monthly payments which include both principal and interest.
• Your minimum payment will be the lesser of $100.00 or the amount needed to repay your balance with interest.
• If you withdraw additional funds during the draw period or the variable-interest rate changes, your monthly payment may change.
• Your payments are recalculated monthly to repay your principal balance over the remaining months of your draw period and your repayment term. 

Understanding the phases of a home equity line of credit
Draw period. The draw period is the fixed length of time during which you can access funds from your home equity line of credit. It runs for 10 years plus 1 month from the date you open the account. Unless you choose to take a fixed-rate advance your annual percentage rate (APR) during the draw period is typically variable and tied to the prime rate.

End of draw. End of draw refers to the date your draw period ends and you can no longer access funds from your home equity line of credit.

Repayment period. After your draw period ends, you’ll enter the repayment period. Your access to funds will end, but you’ll keep the same payment structure as in the draw period — principal-plus-interest payment tied to the variable rate.

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