Skip to content
Fact Checked by Experts

HELOC Loans in Bay County, Florida: Learn About the Benefits and How They Work

A home equity line of credit, or HELOC for short, is an open line of credit backed by your house. You can pull funds from your HELOC as often as you want (up to your set borrowing limit) and repay it later, just as with a credit card.

However, as with all loans, all HELOC borrowers must satisfy specific requirements to qualify. These include a decent credit profile and a reasonable amount of equity in one's property.

Here's a look at the requirements and application process for a HELOC in Bay County, Florida, in case you're curious.

How does a HELOC work?

When financing the acquisition of a home, a HELOC loan is frequently taken out in addition to the primary mortgage, i.e., a piggyback loan. It is often used to reduce a mortgage's up-front costs, including the down payment and PMI (private mortgage insurance).

However, a HELOC allows one to borrow a further 10% of the property's purchase price, meaning they'll only need to come up with 10% to top up the down payment. The HELOC, in this instance, is a second mortgage secured by the first mortgage.

That said, topping up one's down payment fund isn't the only way to use a HELOC. If you already own a home and want to raise funds for a remodel or renovation, debt consolidation, medical bills, or even a divorce settlement, you can take a second loan against your house. You take out the funds you need, up to a set credit limit, and pay them back with interest.

Additionally, upfront costs, including processing fees, service fees, and penalties for early closure or cancellation, may be included in your HELOC. However, compared to unsecured borrowing options like credit cards, you'll incur fewer expenses for a comparable loan size.

But it's wise to find out in advance about any extra costs associated with your HELOC by asking your lender to provide a detailed breakdown.

However, since HELOCs are secured by the borrower's homes, their interest rates are frequently lower than other types of second mortgages. Additionally, you might be able to claim the interest as a tax deduction, reducing your taxable income.

Most lenders allow customers to use credit cards, checks, or online transfers to withdraw money from their HELOCs. But unlike credit cards, HELOCs have a draw and repayment window.

The HELOC Windows

During the draw cycle of a HELOC, ordinarily 10 to 15 years, you are permitted to spend as much as you want, up to your designated credit limit, and make interest-only payments. After the draw period expires, you won't be able to draw funds; instead, you'll have to repay the amount you spend plus interest.

In other words, you must make consistent interest-plus-principal payments during the repayment period until the loan balance is fully repaid. As a result, you'll have to pay more than usual during the repayment window, which usually lasts 10–20 years.

HELOC Requirements

The requirements for a HELOC vary based on the lender. But the basics are essentially the same.

Home Equity

Equity is the remaining sum after subtracting the outstanding balance on all loans secured by your home from its current worth. To express it in percentage, divide the result by the home's current worth and multiply it by 100. Home equity between 15 and 20% is preferable.

However, the limit on your HELOC will depend on your loan-to-value (LTV) ratio, which is the current loan balance divided by the home's current market value.


While LTV is the current loan balance/home's current market value, CLTV is the current balance of all loans secured by the home/ home's current market value.

Most banks will only approve borrowers with a CLTV of less than 85%, but depending on your luck, you may be able to find one that will accept a CLTV as high as 90%.

Good Credit

Your credit score determines your risk level. Scores in the 620-660 range are preferable, though higher scores are even more beneficial.

Borrowers with low credit scores pay higher interest rates and vice versa. Undoubtedly, your credit history will be taken into account.

Sufficient Income

Your income determines if you'll afford your HELOC's monthly payment obligations. As a result, you'll be required to provide documents detailing your income history.

  • W-2 forms
  • Pay stubs
  • Federal Tax Returns for the past few months
  • Letter confirming you receive social security benefit
  • 1099 forms, retirement award letters, etc.

A good history of paying off debt

A HELOC is a second mortgage, so banks will want to ensure you have a good history of paying off debt before they can approve you for one.


Low DTIs are preferred, especially those between 43% and 50%. By comparing your outstanding monthly debt to your monthly income, lenders can determine if you're in a position to shoulder more debt obligations.

HELOC 75-15 for condos in Florida

You can use a HELOC to qualify for a limited condo review, cap your LTV at 75%, and avoid paying private mortgage insurance (PMI) or higher interest rates.

Condo purchases are popular among those migrating to Florida from other states. Many of these folks have previously been pre-approved for mortgages in their home countries. But Florida doesn't evaluate traditional condo loans according to the same standards as other states.

There are three reviews available for condo transactions in Florida - full, limited, and PERS. A full condo review extensively investigates the property's complete financial picture.

In contrast, a limited review conveniently ignores various details of a condo's financial features. Indeed, in a limited review:

  • Lenders are not permitted to review the association's spending (they can't scrutinize what percentage of funds are allocated to reserves).

  • Lenders don't need confirmation of fidelity bond coverage when scrutinizing condo insurance.

  • The ratio of investors to owner-occupied properties is irrelevant to the lender.

  • The condo questionnaire is simple and brief.

To be eligible for a limited condo purchase review in Florida, you must have 75% maximum financing on your 1st mortgage and 90% combined financing on your 1st and 2nd mortgage for your primary residence.

This is achievable using a 15% HELOC loan, a 75% primary mortgage, and 10% funds from personal savings. As a result, it's simpler and easier to complete a limited evaluation and get bank clearance for a condo acquisition.

Home model and stack gold coin

The Benefits of a HELOC

HELOCs are a popular low-cost borrowing option. These loans are favorable for the borrowers in the following ways:

Lower interest rates

Variable interest rates characterize HELOCs. But even if they change over time, the rates often stay lower than those of unsecured lines of credit.

The average interest rate for a $30000 HELOC as of August 2022 is 6.5%, compared to 8.73% for a personal loan of the same amount. A credit card loan of the same amount has an average APR of 15.13 percent.

Of course, among other things, your credit history will influence the interest rate you pay on your HELOC funds.

Rate locks are possible

Some banks let you lock or fix the interest rate on the balance due so that you won't be subject to changing rates once you've accumulated a considerable credit limit.

Although this alternative may come with extra costs or a steeper initial interest rate, it offers homeowners more safety in an environment where borrowing costs are skyrocketing.

However, do your due diligence and compare the loan prices (including upfront fees and interest rates) from various sources before deciding on a lender.

You only pay interest on the amount borrowed

Like a credit card, you only pay for the HELOC funds you spend. This is advantageous compared to many home equity financing solutions, such as home equity loans, which require you to take out and repay the full loan amount whether or not you spend it.

HELOCs are advantageous for projects when you don't know the final cost upfront. You can access substantial funds if needed while avoiding paying for funds you don't spend.

Spend the funds on whatever you please

You can use HELOC funds however you like. Typical uses include launching a business, covering medical costs, funding home improvements, and paying off debt. It's advantageous in the following ways:

  • Closing costs are low.

  • Tax-deductible interest.

  • Less strict underwriting guidelines.

  • It improves a home's value when used for a remodel or renovation.

Promotional offers

Most banks provide promotional offers, such as fee waivers or reduced interest rates, for a limited time to encourage borrowers to take out HELOC loans.

Taking advantage of such offers isn't bad; keep an eye on the overall loan cost (expenses + interest rate) when selecting a lender.

Larger loan amount

Compared to traditional lines of credit, the typical HELOC loan is greater. Your HELOC spending limit will depend on the equity you've accumulated in your home.

Most lenders require an LTV of 80% when evaluating borrowers' HELOC borrowing limits. Your credit and income history will also be taken into consideration.

Great for divorcees

Finding a means to pay your ex for their equity stake in your house during a divorce is stressful in many ways. While you can always sell the home, give your ex-spouse their share and then buy another residence, this may result in a more expensive mortgage than what you had on your first home if prevailing rates are higher. It's the same case with refinancing.

If you do it when prevailing interest rates are high, you end up with an expensive mortgage. A HELOC is more beneficial in this situation. You can borrow up to 80% of the equity in your home and pay your ex-spouse. The advantages of using a HELOC for divorce settlement include:

  • It leaves the 1st mortgage intact.

  • It helps avoid sale and agent commissions and other expenses that come with it.

  • A rate lock/fix may.

  • Lower interest compared to unsecured lines of credit.

Cash-Out Refinance vs. HELOC

There are other options besides a HELOC for getting quick cash using the equity you have in your home. For example, you could do a cash-out refinance. In this situation, you replace your current mortgage with a new one.

You might be able to profit from the deal if the new mortgage is more than the balance left on your prior mortgage. You can put the money toward medical expenses, home improvements, etc.

Refinancing has a few advantages over a HELOC. If the prevailing rates are better than what you are paying now, you should refinance.

But because you're getting a new mortgage, you should anticipate more closing costs than with a HELOC, which usually doesn't have a lot of upfront expenses.

Furthermore, if your equity in the home falls below 20% following the refinance, you'll be required to get private mortgage insurance.

How to apply for a HELOC

Start by evaluating offers from several lenders. Do not be duped by promotional offers. However, it doesn't mean you shouldn't use them when offered. Just keep in mind the overall loan cost (interest rate + upfront expenses).

  • Prepare your documentation and submit any necessary applications. Most lenders offer an alternative online application process, while some may require a trip to the local branch.

  • Get your house appraised. Lenders will typically request an appraisal to determine the current value of your property. Although most lenders will take care of the assessment, be ready to foot the bill on your own.

  • Get ready to seal the deal. You'll be invited to sign an agreement form. The bank will notify you whether your HELOC application is approved and provide information on the interest rate and draw limit. Closing expenses will be rolled into the loan amount.

  • Start using your HELOC. If you reject the loan, you have up to three working days to do so. If not, you can start using your HELOC.

How much time does it take to obtain a HELOC?

The HELOC application and qualification process usually take 2-4 weeks. However, depending on the lending institution and the complexity of your application, it could take even longer.

Is Bay County a great place to live?

With water as clear as crystal, white sandy beaches, and dolphin sightings throughout the year, Bay County, on Florida's northern coast, between Walton and Gulf County, is a great chill spot, alright! It has a population of over 168 000 people, many of whom own their homes due to the availability of low-cost housing. The median home price is under $163,000, while the median household income is $36,092.

The biggest employers are the retail, real estate, tourism, and military sectors. Panama City has an air force base in addition to the state's national guard 53rd infantry. The area's climate leans toward subtropical conditions characterized by short, mild winters and long, hot summers.

Here's a look at places to drop in for ice cream after enjoying these outdoor activities.

  • David's Sno-Balls - David's Sno-Balls, located at 13913 Panama City Beach Parkway, is famous for its New Orleans-inspired sno-balls made of soft-serve ice cream mixed with regular shaved ice. Open all day; the restaurant offers a comprehensive menu that includes lunch and dinner options, desserts, and various ice cream flavors.

  • Mr. Puff's Hand Rolled Ice Cream - This ice cream joint at 8721 Thomas Drive, Unit B, is known for its hand-rolled ice cream, which is made fresh to order. It is open Wednesdays-Sundays from 1 to 9 pm.

  • Ben & Jerry's - Ben& Jerry's has an ice cream store at 9375 Emerald Coast Pkwy, Miramar Beach, FL 32550. It is renowned for its spectacular flavors and dedication to using superior, ethically sourced ingredients. The service is friendly and fast.

  • Sugar Shack PSJ - Sugar Shack PSJ at 319 Reid Ave, Port St. Joe, FL 32456 sells ice cream made with locally-sourced dairy without artificial flavorings or additives. There are many flavors, including horchata, raspberry, coffee, vanilla, and chocolate. Taco waffle cones are also available.

  • Milk And Honey Frozen Yogurt - This is a self-serve frozen yogurt and coffee joint at 4767 Hwy 90 Ste E, Marianna, FL 32446. A good variety of frozen yogurt flavors and all the necessary toppings are available. Their coffee is also excellent—a great spot to chill and unwind after a day in the hot outdoors.

Is getting a HELOC loan a wise move?

Not sure if a HELOC is a smart idea? Well, there are several situations where this piggyback loan is the best option. For instance, if you don't have enough money to put down on the house, you could use a HELOC to boost your funds and speed up the closing process. Additionally, it'll expand your options, allowing you to consider larger homes or even homes in upscale districts.

Moreover, suppose you already own a property. In that case, a HELOC provides a tap into the equity you've accumulated for immediate cash for various uses, including remodeling or renovation, debt consolidation, divorce settlement, etc.

However, as previously said, there are other alternatives to a HELOC. Whether you should get a HELOC or a different line of credit depends on your income, credit history, and home prices in your area. Ask your loan officer to crunch the numbers and provide an accurate picture so you can make the best choice.

With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.

Find The Right Mortgage

For more than 20 years, Phil have been helping customers achieve their home purchase and refinance goals by providing them with invaluable resources and support.

Schedule a FREE Consultation
Phil Ganz

Subscribe to Get Your First Time Homebuyer Checklist

Sign up for the weekly newsletter to stay up to date on the latest real estate market trends, loan news, and so much more!