Home Equity Line of Credit (HELOC)

Home equity is when the difference between the amount you owe on the home and the assessed value. When you own a home for a few years, not only are you paying down the mortgage with your monthly payments, but your property may have appreciated in value over those years. This means that your home is worth more than what you paid for it and more than what you owe, giving you additional equity in the home.

By applying for a home equity line of credit you are securing the loan against your property and generally you will get a better interest rate than an unsecured loan.

Home equity line of credit (heloc)

Identify why you need a HELOC

Before taking out a HELOC, it’s important to identify what you need the funds for. There are several instances when borrowing money from a HELOC can make sense.

  • Instead of moving and incurring closing costs, a lot of homeowners are choosing to stay put and renovate their homes. Using your HELOC to pay for home renovations can make sense, as long as it increases the market value of your property.
  • Debt consolidation is another popular option. Why pay 18 or 19 percent on credit card interest when you don’t have to? If you decide to do this, just make sure you put a repayment plan in place, as you’ll be no better off if you make interest-only payments.

Understand how HELOC rates work

  • A HELOC works a lot like a variable rate mortgage. However, instead of prime rate minus a discount, HELOCs are typically prime plus a premium
  • Your lender may hike the premium on HELOC rates at its discretion. You can avoid a premium hike by staying in your lender’s good books. 
  • A HELOC is typically offered to you only if you have at least 20% equity in your home and as much as 35% in urban areas. You can typically access between 65% and 80% of your home’s appraised value with a HELOC.


Jaret really worked hard to present our story to a lender and get us approved. Coming to our house was also very convenient as we have young children.

Cindy and Joel

I took Jaret’s advice to let him look into a better renewal rate than the one that was automatically mailed to me by my lender. He found a better offer, and I’m much happier.

M. Long

Thank you for helping me get into my first investment rental property.



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