Home Equity Line of Credit (HELOC)
A HELOC from CNB Bank & Trust, N.A. can put you on the right track to financing your next big housing project or purchase. Get started on your application today.
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What are HELOCs?
A home equity line of credit, or HELOC, is a line of credit that utilizes the equity you have in your home as collateral to provide you with a revolving credit line to borrow from. A predetermined credit limit is provided to borrowers, from which they can borrow as needed throughout the HELOCs draw period.
Throughout the draw period, borrowers will make minimum payments on the amount of money they choose to borrow, and as they repay the borrowed amounts, the credit will become available to use again, similarly to how a credit card works. After the draw period ends, the repayment period begins, where bigger payments are made in monthly increments over a roughly 15–20-year period, in order to repay the credit balance used and the interest accumulated on it as well.
Why is a HELOC beneficial?
There are many reasons a HELOC might be beneficial for you, whether it be for home renovations, consolidating debt, or other large expenses. Some potential benefits of a HELOC may be:
- Flexibility: The long draw period of HELOCs allow you to be flexible in borrowing, as you just take as much as you need, when you need it. Additionally, when borrowing from a HELOC, you'll only need to repay what you actually borrowed from the loan, as well as the accumulated interest on it.
- Lower Interest Rates: HELOCs typically have a lower interest rate than many other forms of borrowing, such as credit cards or other personal loans.
- Boost to Credit Score: Paying your HELOC on time could help you boost or repair some of your credit score.
- High Credit Limit: Since HELOCs are intended to be used for large expenses, they typically have high credit lines to cover this. This allows you to ensure you have the funds you need, without worrying about needing to guess the exact amount you have to borrow.
Feeling ready? Begin your online application now!
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Frequently Asked Questions for HELOCs
How does a HELOC work?
Once you apply for a HELOC, your lender will approve you for a certain amount of credit, which can be borrowed from at any point in the draw period. Once the draw period is over (typically after 10 years), the repayment period will begin, where you'll pay off the total amount used in the draw period, as well as the interest accumulated.
What can I use a HELOC for?
A HELOC can be used for many different things, including home improvements and renovations, debt consolidation, covering unexpected costs, and other large expenses.
How do I qualify for a HELOC?
To qualify for a HELOC, you’ll typically need to have a good credit score and a fair amount of equity in your home, and your lender will consider your income and other financial obligations to determine if you are eligible.
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