No one knows what the future holds. The last two years have taught us to expect the unexpected and always save for a rainy day. But that’s not always easy to do, especially when so many jobs have been impacted by the Coronavirus. If you own your home, it can provide much-needed emergency funds if and when you need them thanks to a Home Equity Line of Credit (HELOC) from Heritage Bank.
Bankrate reports that since the pandemic began, approximately 35% of Americans have less emergency savings than before, 27% have some (but less than three months’ worth) and 21% have none. But even if you have a mortgage on your home, you can apply for HELOC funds to use now or save for unforeseen bills.
To apply for a HELOC, you don’t have to have owned your home for a specific amount of time, explains Heritage Bank Vice President and Branch Manager Dorothy Wimberly. They establish things through a title search and in-depth appraisal and the HELOC takes second position behind your mortgage loan.
Unlike a first mortgage, with its many fees, points and escrow funds, a HELOC is great for home projects, short-term financing of purchases and other needs. “It’s a lot of flexibility,” says Wimberly, “Like having a large balance credit card.” It also doesn’t compromise your great home loan rate (if you were lucky enough to score a super low percentage) or important nest egg savings.
Applying for a HELOC takes up to 30 days and hinges upon the appraisal. At Heritage Bank, they use an “arms-length transaction” by having a second party choose an appraiser from their approved list. The bank then takes the final report and reviews it when determining the maximum amount that can be provided to the homeowner. “We strive to give the customer what they request,” says Wimberly, “and we strive to find the appraisal that makes the most sense.”
When a prospective borrower calls in or drops by, Wimberly and her team are happy to answer any questions about the process, rates, timelines and repayment details. “I like to make sure my customer is as informed as possible.” She also compiles an amortization schedule showing how the debt can be repaid over time. Need payments at a certain dollar amount? No problem. Want to pay it all back within a fixed time period? They can show you how.
“If you have to borrow and you have the equity in your home, this is a lower percentage rate than credit cards,” says Wimberly. Even better, apply for one now—even if you don’t need it at the moment—to keep you covered in case of an emergency. With a draw period that’s typically ten years and an annual fee of less than $75, you can rest easy.
Or crunch the numbers for surprising ways a HELOC can actually save you money. If you were to buy a $20,000 car with your HELOC versus a traditional auto loan, you’d save $1,845.32 over the life of the loan according to Heritage Bank’s online calculator. The overall interest rate is likely lower and interest payments may even be tax-deductible. Enter your own values to see how it changes the outcome for your shiny new ride.
You can also use a HELOC to pay off and consolidate high-interest credit cards, make repairs before selling your home or cover unexpected medical bills. Having a HELOC you don’t use can also improve your overall credit score as it increases your available credit. Monies can be accessed online, by phone, in person or through checks.
For many of us, our homes are the largest, most expensive and (let’s be honest) slightly scariest purchase we’ll ever make. But handled properly and with a little ongoing maintenance, they’re more than a place to live, play and sleep. With a HELOC from Heritage Bank, your house can also be a safety net for unexpected expenses.