What is a HELOC?

A Home Equity Line Of Credit (often called HELOC, pronounced Hee-lock) is a loan in which the lender agrees to lend a maximum amount within an agreed period, where the collateral is the borrower’s equity in his/her house. Though not always the case, these loans are most often in the 2nd lien position on title, subordinate to an existing first mortgage. These loans offer home owners the ability to get cash as needed for home improvement, debt consolidation or many other reasons without refinancing their first mortgage. These can also be simply used as a 2nd mortgage when purchasing a home in order to not go above a certain loan limit, or to stay below 80% Loan to Value and avoid Private Mortgage Insurance (PMI) on Conventional loans.

There a several ways that these HELOC’s can be structured, and the rules are always changing as investor risk tolerances changes with the financial climate. For more information on current offerings, please reach out to us directly.