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Shopping for the Ultimate HELOC Deal

Whether you’re looking for the cash you need to renovate your kitchen, replace your roof, or help pay your child’s tuition, our tips for getting the ultimate HELOC deal will help. A HELOC or home equity line of credit is a revolving line of credit secured by your home than can provide you with the cash you need for just about anything. Like a credit card, you borrow up to the limit and as you repay the outstanding principal balance, you can borrow again. There are many things to consider when shopping for a home equity line of credit from your credit union or another lender. We’ll highlight a few below.

Shopping for the best HELOC rates 

It’s always important to shop around for the best HELOC rate. speak to several different lenders, including your local credit union to find a competitive rate. Even a 1% rate difference can save you money. Keep in mind that a HELOC typically has a variable interest rate, which can cause your monthly payments to go up over time. Each lender will have a formula as to how they determine your rate. Ask for specifics.

Low introductory Home Equity Line of Credit offers

Your lender may also have a low introductory home equity line of credit rate special. Low introductory HELOC offers can provide you with interest savings for a limited period of time. HELOC rate introductory specials, such as Benchmark FCUs Ultimate HELOC can offer great savings on interest. The key is to be fully aware of exactly how long the initial special rate lasts and what it will revert after that introductory period is over. For example, Benchmark’s Ultimate HELOC intro rate is 1.99% APR* for the first six months. After that time, the rate will revert to a rate determined by a combination of your credit score, your LTV (Loan-to-Value) and the Wall Street Journal Prime Rate.

HELOC payment requirements can vary from lender to lender 

Check the type of payments required by each lender. Some may require interest-only during the draw period, while others will want principal and interest payments during that same time. Benchmark FCU actually offers consumers a choice of either type, so you can pick the right option for your budgetary needs.

In addition to the type of payment, it’s also important to know when the home equity line of credit draw period ends and the repayment period begins. We mentioned the term draw period above. During the draw period, your HELOC acts as a line of credit. You can borrow up to your limit, pay down and borrow again as often and as much as you’d like. Your draw period is always set for a pre-specified amount of time. For instance, it could be a 5-year draw or a 10-year draw. When that draw period ends, you are no longer able to borrow against the line of credit. If you are planning on using the funds for expenses you will be having over time, it’s important to know when that draw period will be over. You’ll want to ensure you have enough time and access to money to complete your projects. Your repayment period could last as long as 15 years. It’s important to remember that you can’t draw on the line at all during that time.

Look for a lender with flexible home equity line of credit terms 

If you don’t read the fine print when shopping for a HELOC lender, you may come to find that you are required to take a minimum withdrawal of your line during a certain time frame. If you don’t need that required draw during that time period, you will end up paying interest on funds you didn’t really want. Similarly, a lender may have a HELOC inactivity fee. Again, if you don’t draw a required minimum, it may cost you money in the form of an inactivity fee. Be sure to read all the fine print and question your lender about any and all fees, costs, and penalties involved with your HELOC.

Applying for a HELOC

HELOCs are a great way to complete home improvement projects, pay for major life events, education or medical expenses or just about anything at all. Understanding just how a HELOC works will help you select the loan best suited to your needs. Be sure to read more about Benchmark Federal Credit Union’s Ultimate HELOC deal by clicking here.

You’ll benefit from competitive rates, including a low introductory rate and choice of payment options. Tap into your home’s equity today with a HELOC from Benchmark FCU in Chester County, PA.

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