What is a Home Equity Line of Credit (HELOC)?

HELOCs are very popular in Hawaii since most locals have a lot of their wealth tied up in their home. Home equity lines help to tap into some of that equity and allow homeowners to consolidate debt, pay for student tuition, and repair or renovate their home to increase a property’s value.

With a HELOC, you’re borrowing against the available equity in your home and the home is used as collateral for the line of credit. A HELOC is very similar to a credit card in the sense that as you repay your outstanding balance, the amount of available credit is replenished. You can continue to pull out money “draw” and repay during the “draw period” (usually the first 10 years) as much as you like. Typically, at the end of the draw period, the remaining balance is amortized over the next 20 years and you end up with a fixed payment made up of both principal and interest.

What is the process like?

The qualification process for HELOC is very similar to obtaining a first mortgage. The documentation necessary and the time that it takes to obtain a HELOC is about the same as the normal home buying process.

If you would like to know more about HELOCs please contact me below. I would be happy to refer you to a great Mortgage Loan Officer.