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Home equity lines of credit
A home equity line of credit (HELOC) is generally a 2nd mortgage loan you take out in addition to the loan that you currently have. Most homeowners take out a HELOC to finance home renovations. Or, you could take out a HELOC to consolidate debt.
When we work with clients who take out HELOCs, it’s generally to help them finance larger purchase prices with lower down payments. Taking out two loans rather than one loan allows you to do 3% down up to prices of $808k, or 5% down up to $1,080,000.
A HELOC monthly payment for the first ten years is interest only. In this time period, a homeowner is able to pay down the loan balance and then draw back upon it…somewhat like a credit card. After the first ten years, the HELOC payments convert to principal and interest, over the remaining twenty year period, and drawing upon the balance is no longer allowed.
HELOC interest rates are always based on Prime. Prime is 3% above the Federal Funds rate. So if the Federal Funds rate is 1.75%, then the Prime rate is 4.75%.
Depending on your credit and how much you will borrow compared to the value of your home, the effective interest rate of a HELOC may be just below, or just above Prime.
While we do not directly issue HELOCs, when we are working with clients purchasing we will help them obtain one through one of our partner credit unions.
If you are already a homeowner and interested in taking out a HELOC, the contact info for the folks we work with regularly is copied below. You will need to reach out to them to apply for a loan, order an appraisal through the credit union, and you can close after your loan is approved.
If you are purchasing and taking out a HELOC simultaneously with a purchase loan we are financing, we’ll reach out to them on your behalf and they will follow up with the application items which are necessary. In a simultaneous purchase, the credit union will utilize the appraisal that we complete at First Home Mortgage.
Next MarkCredit Union: Bill Cook (Offer home equity loans in addition to HELOCs)
bcook@fairfaxcu.org 703-218-9900 x 1190
Tower Federal: Reed Voorhees (Excellent rates when financing less than 80%. HELOCs only)
301-497-7000 ext. 7212
reed.voorhees@towerfcu.org
Spectra Credit Union: Woody Roberts
https://www.spectracu.com/products/home-equity
571-260-9073
Arlington Federal Credit Union: Dwight Gordon (Very fast closes. Finance up to 95%. HELOCs only)
703-526-0020 x246
Here is a great Post article on whether the interest on a HELOC is tax deductible after the 2018 tax changes: Link to article
Fulton Bank: HELOCs that work for owner occupied AND investment properties
Lisa Swan
410-730-5031 x 15924