Purchasing your next home without parting with your current home or it’s LOW-INTEREST RATE!
Most homeowners enjoy a low current mortgage rate and are hesitant to surrender such an impressive rate. Here is where home equity line of credit comes in - (HELOC) “Second Mortgage”- a solution allowing you to tap into your existing home's value for the down payment on your next property while maintaining the attractive terms of your first mortgage. Transform your primary residence into a lucrative investment, targeting the strong rental market where many prefer renting due to affordability challenges. The monthly rent you collect has the potential to cover a substantial portion of both your original mortgage and HELOC payment, turning your first home into a profitable venture.
Home Equity Line of Credit (HELOC) and a Home Equity Loan (HELOAN) are both forms of borrowing against the equity in your home, but they function differently.
-HELOC (Home Equity Line of Credit): It operates like a revolving line of credit, similar to a credit card. You're given a credit limit based on your home's equity, and you can borrow from it as needed. Interest rates are often variable, and you only pay interest on the amount you use. HELOCs typically have a draw period (during which you can borrow) and a repayment period.
-HELOAN (Home Equity Loan): Also known as a second mortgage, a HELOAN provides a lump sum upfront. It comes with a fixed interest rate, and you make regular monthly payments over the loan term. It's a one-time loan with a set repayment plan.
In summary, a HELOC offers flexibility with a revolving line of credit, while a HELOAN provides a lump sum with a fixed interest rate and regular payments. Choosing between them depends on your financial needs and preferences. A Home Equity Line of Credit (HELOC) loan offers several advantages, especially when you can refrain from touching your original low-interest rate. Firstly, a HELOC provides a flexible source of funds, allowing you to borrow against the equity in your home as needed. By keeping your original low-interest rate intact, you maintain cost-effective financing for your primary mortgage. This preserves the financial benefit of your initial loan while giving you access to additional funds for various purposes, such as home improvements, education, or debt consolidation.