What is a HELOC, and how does it provide financial flexibility?
Let's start with the basics. A Home Equity Line of Credit (HELOC) is a variable rate open line of credit based on your home's available equity. Homeowners are offered a line of credit which can be accessed when they need it during the draw period, which is the amount of time you have to draw funds from that available credit. Generally, a homeowner's borrowing limit can be about 65-85% of the equity in their home, minus any other outstanding loans against it, such as a primary mortgage. The funds from a HELOC can be used to pay for home improvements, debt consolidation, major life events, and more.
A HELOC often has a lower interest rate and more flexibility than many other types of loans. You only use the money when you need it, and you only pay interest (during the draw period) on what you use. After the draw period of your HELOC has ended, you will enter the repayment period, during which both principal and interest will be due every month.
Benefits of a HELOC:
- Financial Flexibility
Homeowners can access the funds from a home equity line of credit to use it however and whenever they need it—like having cash on hand. You could pay for your next home improvement project, fund tuition expenses or pay off student loans, consolidate and pay off loans at a potentially lower rate, fund a life event or unforeseen expense. - Save on Fees and Closing Costs
Unlike the high fees charged by credit card companies for cash advances. Most HELOC lenders do not charge fees when you draw on your available credit. In addition, many lenders offer low or no closing fees. - Low Interest-Only Payments
Because they are secured by your home equity, HELOCs tend to have lower interest rates than unsecured loans like credit cards or personal loans. And, with a HELOC, homeowners pay interest only during the draw period on the amount they draw and only from the date the funds are withdrawn.
Why Bethpage
With a Home Equity Line of Credit from Bethpage, members receive:
- Zero application fees, zero annual fees, and zero closing costs[4].
- Financial flexibility to access the funds how you need them and when you need them while making low interest-only payments for the first 10 years[2] (i.e., the draw period).
- To protect yourself from rising interest rates, Bethpage's Fixed-Rate Option, gives you the opportunity to convert some or all of your variable-rate HELOC to a fixed rate loan.[3]
Ready to unleash the power of your home's equity? Apply Now!
Rates and terms are subject to change without notice. All offers of credit are subject to credit approval requirements and applicants may be offered credit at higher rates and other terms. Loan-to-Value (LTV) and/or Combined LTV (CLTV) restrictions apply. Hazard insurance is required on all loans secured by real property (flood insurance may also be required where applicable). Rates shown are based on a borrower's primary residence, a maximum CLTV of 65%, a minimum initial draw of $25,000 taken at HELOC account opening, and automatic transfers from a Bethpage personal savings or checking account. Consult a tax professional regarding the potential deductibility of interest. Bethpage does not currently offer HELOCs in Texas. Membership at Bethpage is required by opening a minimum $5 share savings account at or prior to HELOC account opening.
[2] Interest-only payments apply to the variable rate line in use only and is not applicable to any Fixed-Rate Loan Option.
[3] A Fixed-Rate Loan Option (FRLO) allows you to convert an outstanding variable rate HELOC balance(s) to a fixed rate loan(s), which results in fixed monthly principal and interest payments at a fixed interest rate. A FRLO is optional and is available at the time of disbursement (account opening), or during the 10-year Draw Period. Borrowers may only have a maximum of three (3) FRLOs open at any one time. The minimum amount for each FRLO is $10,000. The minimum loan term is 5-years, and the maximum term cannot exceed the account maturity date. If you choose to convert any portion of your balance to a FRLO, the APR will be the U.S. Prime Rate as published in the Wall Street Journal that is in effect at the date of conversion, plus a margin. The margin applied will be based on your credit history, CLTV ratio, and lien position at the time of application and the term selected for the FRLO. Rates for a FRLO are typically higher than the variable rates on the HELOC account.
[4] Closing costs for the first $500,000 will be paid by Bethpage but must be repaid by the borrower(s) if the HELOC is closed within first 36 months of account opening. These fees generally range between $500.00 and $15,000.00 depending on the line amount, property value, location, and/or property type. Line amounts over $500,000 may be available on a case-by-case basis to qualified applicants, are not eligible for the discounted introductory rate at any time, and the borrower(s) will be responsible for mortgage-related taxes and title insurance costs on the line amount over $500,000 (up to the approved credit limit). The total third party fees generally range between $500.00 and $60,000.00 depending on the line amount, property value, location, and/or property type. Property insurance (including flood insurance, if applicable) is required.