Do you currently own your own home, and are you looking for a source of additional income? There are certain loan options available that can allow you to access your home equity in exchange for credit or cash. A home equity line of credit, or HELOC, is one great option available that allows a borrower to tap into their home equity. If you own a home in the areas of Palm Beach, Tri-County, or Broward County, Florida, and interested in learning more about your mortgage options, CTC Mortgage can help. Read on to learn more about supplementing your income with a home equity line of credit.

Essential Information: How A HELOC Works

Obtaining a home equity line of credit is similar to using a credit card in that it helps a homeowner borrow funds against their home equity for a specific time period and credit limit, with the property serving as collateral for the credit line. Many people opt for a HELOC because they can use it to pay off or consolidate their debt, use the funds for home renovation and repair, higher education, etc. When a borrower starts to pay back the HELOC balance, their available credit becomes restored, allowing them to borrow as much funding that is needed throughout a certain time period. In a HELOC, borrowing and repayment are split into separate periods consisting of a draw period in which the credit line is open and available to use, and the repayment period, which occurs when borrowing is not allowed and repayment is required to begin. The interest rate of a home equity line of credit is generally lower than other types of loans and can be tax deductible in certain situations. It is important to note that a HELOC will be considered a second mortgage, meaning that it is an additional loan on your property in addition to your current mortgage, even though closing costs will not be required.

Qualifying For A Home Equity Line Of Credit

When applying for a HELOC, eligibility criteria will vary by your lender, however the typical eligibility requirements that must be met include:

● A minimum credit score of 620, although better rates will be available for a score of 780 or higher

● A minimum of 15% to 20% of home equity

● A borrower must demonstrate history of consistent, timely bill payment and steady income

● A loan-to-value ratio (LTV) of less than 80 percent

● A debt-to-income ratio (DTI) of 43% to 50%

Getting HELOC Assistance

A home equity line of credit can serve as one option to help with your financial planning. If you live in the areas of Palm Beach, Tri-County, or Broward County, Florida, and are interested in exploring your mortgage options, contact CTC Mortgage today for a consultation.

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