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

A HELOC is a credit line that lets you borrow against the equity in your home. Equity is the value of your home minus what you still owe on your mortgage. If your home is worth more than the amount you owe, you may qualify for this type of loan.

A HELOC works differently from a traditional loan. With other loans, you receive one lump sum at closing. A HELOC gives you access to funds over time. You borrow only what you need, when you need it. You also pay interest only on the amount you use.

How Does a HELOC Work?

A HELOC has two main parts:
1. The draw period: You can withdraw money as needed, up to your approved limit.
2. The repayment period: You pay back what you borrowed, along with interest.

You stay in control of when you borrow and how much you borrow. This makes a HELOC a flexible option for many situations.

Common Uses for a HELOC

Members often use a HELOC for:

• Home improvement projects

• Repairs that add value to the home

• Debt consolidation

• Education costs

• Emergency needs

• Flexible access to funds for future plans

Because you borrow only what you need, a HELOC can be a cost-effective way to handle larger or unexpected expenses.

Is a HELOC Right for You?

A HELOC can be a helpful tool, but it depends on your goals and budget. It is important to understand your home’s equity, interest rates, and repayment requirements. A HELOC may be a good fit if you want flexible access to funds without taking out a large traditional loan.

Talk With Our Team

If you would like help deciding whether a HELOC is right for you, our team at City of Firsts Community Federal Credit Union in Kokomo is here to guide you.

Visit COFFCU.ORG or contact us today to learn more and get started.