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Benefits of a Reserve Home Equity Line of Credit
How you can use a HELOC to your advantage
Having a reserve Home Equity Line of Credit (HELOC) can come in handy for some homeowners. A HELOC is a loan provided by a bank or lending institution that usually is a second position mortgage (behind your first mortgage) that has a variable interest rate and if you have available credit, you can re-access or take advances up to your maximum credit limit.
The Basics:
1. Variable Interest Rate
2. Second Position Mortgage
3. Re-access
4. Interest only period for a limited time (usually 5-10 years)
This type of mortgage can be beneficial to have even if you don’t need it. Why? I encourage homeowners to have a HELOC in reserve (meaning having it in place with as little or no balance as possible) so that if something were to happen and you need money easily you can access your HELOC and not dip into savings or have to refinance your first mortgage again. I look at it as a safety net for homeowners and a great tool to have in place.
Kevin O’Connor
Mortgage Consultant
www.koloans.com
800.550.5538
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