A HELOC is one of the easiest ways to access cash to use any way you choose.

A HELOC (home equity line of credit) is one of the most popular ways homeowners can access cash. It’s a loan that functions a lot like a credit card. You draw funds as you need them and pay them back with interest. However, rates on HELOCS are almost always much less than those charged by credit cards.

You can draw on your equity as much or as little as you like. If you’re not using any funds, there are no charges.

Some things members commonly use HELOCs for include:

• home remodeling and new furnishings
• automobiles and boats
• travel or vacation home
• college tuition

How it works

Equity refers to the portion of your home’s value above what you owe. For example, if the appraised value of your home is $175,000 and you owe $140,000 on your mortgage, your home equity is $35,000.

In general, you can borrow up to 85% of the appraised value of your home. The amount you qualify will depend on factors like your credit score and total outstanding debt.

Unlike a mortgage, there are no points or closing costs. The cost of the loan is interest only. There may be fees for an appraisal if one is needed.

Be thoughtful when using a HELOC for your kid’s college tuition

While HELOCs carry lower interest rates than student loans, some student loans come with protections. For example, they may offer loan deferment, flexible repayment options, and, in some cases, the ability to discharge the debt.

HELOCs for tuition work out great for many families. Often the child helps pay off the debt when once he or she is working. However, parents must also consider their own retirement needs. If for some reason your child can’t help with repayment, you could face financial difficulty at a time when you’re no longer earning a salary.

When to use home equity loans

The best time to use a HELOC is when you need access to cash and you know you’ll be able to repay the loan.

Applying is easy

If you decide a HELOC is right for you, it’s easy to apply online with Consumers – whether your primary mortgage is with us or not. Head over to the online application or call us at 800-991-2221.

Consumers helps more than 1,000 members finance their homes each year. When you need a mortgage or home equity line of credit, call us at 800-991-2221. We’re here to help you get the home of your dreams!