Home Equity Line of Credit
Is a Home Equity Line of Credit Right For You?
A home equity line of credit (HELOC) is a second mortgage on your home and is typically used for two main purposes. The most common is to avoid costly PMI on a home purchase or refinance that is typically associated with putting less than 20% down. For example, if you have saved up a 10% down payment, instead of obtaining a single loan for the other 90% and be forced to pay mortgage insurance, you can potentially secure a 10% HELOC to ‘build’ a 20% down payment, thus avoiding having to pay mortgage insurance. You may have also heard this loan referred to by its other name, 80-10-10.
Another reason you may want to secure a HELOC is to remodel your home. As mentioned in (Home Remodel page in the Refinance category), a HELOC might be all or part of a home improvement strategy to finally have the house of your dreams.
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These materials are not from HUD or FHA and were not approved by HUD or a government agency.
Any rates quoted are not guaranteed and are subject to market fluctuations.