A Home Equity Line of Credit (HELOC) is a tool which allows you to utilize the equity in your home to borrow money for whatever you need. Generally, HELOCs are used for large expenses, such as home improvements, college expenses, medical bills or even auto purchases. The interest on a HELOC is often tax deductible—consult your tax advisor for more information.

A home equity line of credit (HELOC) is a line of credit extended to a homeowner that uses the borrower’s home as collateral. Once a maximum loan balance is established, the homeowner may draw on the line of credit at his or her discretion. Interest is charged on a predetermined variable rate, which is usually based on prevailing prime rates.

For example:

Appraised value of home: $100,000

Percentage of credit accessible: x 80%

Percentage of appraised value: = $80,000

Less balance owed on mortgage: –$40,000

Potential line of credit: $40,000

Home Equity Lines of Credit from TelComm CU allow members to borrow up to 80% of the value of the home. Closing costs can usually be included in the loan and are generally under $600. Interest is charged only on the balance owed and payments are amortized over 20 years. Members are able to borrow up to the credit limit for the first 10 years. HELOCs are serviced by TelComm CU and are not sold to an outside lender. No pre-payment penalty.

Another option members consider is a Fixed Rate Home Equity Loan. Like a HELOC, it is based on the equity in the borrower’s home. But the difference is with a Fixed Rate Home Equity Loan you receive all the money upfront, and then make equal monthly payments of principal and interest for the life of the loan (similar to a first mortgage or an auto loan). The maximum term available on a Fixed Rate Home Equity Loan is 15 years but you may have a shorter term if you prefer. Contact a Loan Officer for details.