Specializing in Southern Orange County

What is a HELOC?

A HELOC stands for Home Equity Line of Credit and this is essentially a type of mortgage that acts as a credit line against the equity that you have in your property.

Typically, a borrower will have a typical first mortgage loan, and perhaps open up a Home Equity Line of Credit to do some repairs or renovation on their property.

The HELOC almost always will have an adjustable rate and in some cases, you’ll be making interest only payments on it for the first several years of the mortgage loan. If you are planning on getting a Home Equity Line of Credit, keep in mind that banks will want to see that you have a substantial amount of equity in your property.

It’s also a good idea to try and avoid having a HELOC with too large of a balance because again it is tied to an adjustable rate. If you have a very large balance on a HELOC and the rate goes up, then your payment on that HELOC could potentially skyrocket. However, if you can keep the balance on a HELOC relatively low, then changes to the interest rate won’t affect the monthly payment as much.

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