Get to Work with a HELOC

Kick off your 2022 home projects with a SouthPoint Financial Credit Union Home Equity Line of Credit (HELOC). With 24-hour access, you are free to use funds for anything, not just home related expenses. Your home is a powerful asset and we can help you use the equity in it. A Home Equity Line of Credit is a revolving credit line allowing homeowners to borrow money against the equity of their home. The HELOC becomes a second mortgage on a home; if the borrower owns the entire home, the HELOC is a primary mortgage.

A Home Equity Line of Credit (HELOC) is an open credit line that is secured by the paid value of the borrower’s home. At SouthPoint, homeowners can generally open a HELOC with up to 100% of their home’s equity, or the difference between what’s left on their home loan and the current value of it. A HELOC provides homeowners with a convenient way to use the equity in their home.

HELOCs have a “draw” period, during which time the borrower can access the available funds. That time frame is 10 years with a SouthPoint HELOC. When the draw period ends, the loan will have to be repaid within the next 10 years.

Once approved for a HELOC, borrowers can spend the funds however they choose. HELOCs are often used to fund a home renovation or expansion, but they can also be used to cover any large expense, such as a medical emergency, a new business venture, a wedding, a dream vacation, an adoption or the purchase of a recreational vehicle.

Here are some of the primary advantages of a HELOC:

Only borrow what’s needed.

A HELOC does not provide borrowers with a lump sum of cash. Instead, like a credit card that is only used when necessary, the homeowner can withdraw funds from the HELOC as appropriate. This makes a HELOC a great option to pay for expenses when there is not a known price tag. Also, because the borrower is only paying interest on the money they actually withdraw, they’ll have the freedom to take out a larger line of credit and decide how much of it to use later on.

Qualify for a low Annual Percentage Rate (APR).

Interest rates continue to hover at all-time lows. Opening a HELOC now means qualifying for low interest rates on the line of credit. Most HELOCs have fluctuating interest rates.

Flexible terms.

Terms and repayment plans for HELOCs are generally flexible. During the draw period, homeowners can withdraw funds from the HELOC as needed and use the money however they please. When the draw period ends, the homeowner may be allowed to renew the line of credit and continue withdrawing funds as needed.

Monthly payments also vary.

Many lenders only require borrowers to make payments toward the interest of their loan during the draw period. Once that time is over, the borrower will need to pay back the entire principal of the loan over the course of 10 years. This is especially beneficial if the borrower does not have the funds to pay back the loan now, but anticipates an improvement in their financial situation within the next few years.

Potential tax benefits.

As per the Tax Cuts and Jobs Act of 2017, the interest paid on home equity loans and lines of credit is tax-deductible if the funds are used to buy, build or substantially improve the home of the taxpayer who is securing the loan.

Build a credit score.

There’s no need for an excellent credit score to qualify for a HELOC, and on-time monthly payments can significantly boost a homeowner’s score.

Low fees.

A SouthPoint HELOC costs little to establish at $299 plus an appraisal if needed. There is no annual fee on our HELOCs.

When life throws an unexpected curveball or even a unique opportunity, a home equity line of credit can be a great option. With interest rates at record lows, taking out a HELOC makes more sense than ever.