What the Heck Is A HELOC?
A home equity line of credit - which lenders and mortgage brokers may refer to as a HELOC - is a different kind of home loan available today.
An equity line of credit will have different rates and terms from the conventional first mortgage rates. In a standard or conventional mortgage, your monthly payments cover both the principal and the interest, and possibly escrow, taxes and insurance.
An equity line of credit payment doesn’t reduce your principal loan amount and doesn’t include escrow. You’ll be borrowing against the equity of your home and paying the bank an interest premium on that loan - end of story. With a HELOC, you pay only the interest on the loan and you get the money for less time than you do a standard 1st mortgage.
How long does it take to apply for and be approved for a home equity line of credit?
The processing of these lines of credit is usually fast and easy, and can even be completed online. When the deal is done, you’ll either receive one lump sum payment by check or a new checking account that is pre-approved for expenditures.
