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How does a HELOC work?

Posted in Articles on Monday, February 06, 2017

With a HELOC, you can renovate or consolidate with a great rate.

Want to know a secret? Here’s something many of our members haven’t realized – a Home Equity Line of Credit (also called a HELOC) is one of the most versatile financial tools we offer.

Why? Because a HELOC can be used for so many things – like home improvement projects, debt consolidation or emergency funds. And the interest rate on a HELOC is typically much lower than those on a credit card. For example, our we’re currently offering a 5-year fixed HELOC for just 3.40% APR.

Here’s how a HELOC works:

  • It’s all about the equity. If you have equity in your home, you could get a HELOC. And the more equity you have, the more available credit you could have.
  • Funds are ready to go. It only take about two weeks to set up a HELOC. Once it’s ready, money is available whenever you need it.
  • Fixed for a full five years. Our five-year fixed HELOC means just that – your rate won’t change for the first five years.
  • Tax-deductible, too? Yes, interest paid on home equity loans can be tax-deductible (consult your tax advisor).
  • Nothing borrowed? Nothing owed. Your HELOC is always on the ready but you owe nothing until you actually access the funds.

HELOC funds may be accessed online anytime and as often as you like. For instance, if you’re remodeling a kitchen, you can borrow separate amounts on different occasions to pay for plumbing, cabinets, flooring and countertops.

To learn more, schedule an appointment to talk with one of our experts or learn more in this video.

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  1. home equity

APR = Annual Percentage Rate. Rate is fixed for first five years of the plan, and after the five-year (60-month) term expires, the rate is variable and the maximum APR is 21%. For a $30,000 five-year fixed HELOC at 3.40% APR, the monthly payment will be $300 (taxes and insurance premiums not included). Includes Loyalty Discount of 0.25% APR when enrolled in direct deposit of net income and automatic loan payments from your Veridian account. Borrowers will lose Loyalty Discount if they fail to meet qualifications during loan term. Add 2.50% to interest rate for loans with loan-to-value ratio over 80%. Appraisal fees may apply. 

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