Ever wondered how a HELOC (Home Equity Line of Credit) works? Let’s break it down step by step:

1. Establishing Your Credit Line: A HELOC allows you to create a revolving line of credit based on your home’s value minus what you owe (your home equity). You could potentially borrow up to 85% of this home equity.

2. Instant Access: Shortly after approval, you’ll have quick access to your credit line. Your lender typically provides a HELOC credit card, checks, and an online account for digital transfers. Use it for home renovations, emergencies, or any other expenses.

3. Draw Period: During this phase (usually 10 years), you can use your HELOC card or checks to charge expenses, withdrawing against your credit limit. Payments during this time are interest-only, and you can pay down your principal.

4. Repayment Period: Once the draw period ends, you’ll enter the repayment phase. No more withdrawals allowed, but you’ll start repaying the principal balance with monthly payments. Your balance can also be paid off if you sell your home during this period.

HELOCs can be a valuable financial tool – if you have questions or want to explore your options, feel free to reach out!