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HELOC Loans in Bradford County, Florida

Bradford County is a hidden gem in Florida, with homeowners enjoying benefits like low property taxes, low cost of living, and that classic charm you could only find in the south. As you continue to pay down your mortgage for your house in Bradford County, the equity in the property increases, and you can tap into this equity when you quickly need a lump sum.

From divorce settlement and medical bills to home renovations and even a big purchase like buying a condo, the home equity line of credit provides a convenient way to use your home's equity to get the cash you need.

HELOCs offer a flexible credit line in which you only borrow what you need, keeping your monthly payments low and avoiding unnecessary debt.

But before applying for a HELOC, be sure you understand the basics, such as the draw period, qualifications, and whether it's right for you. This guide discusses HELOC in more detail, its benefits, and how it works. It also features the best ice cream spots in Bradford County.

What is a HELOC?

A HELOC offers you a revolving credit line that allows you to take out a loan against the equity in your home and usually acts as a second mortgage. Since a HELOC has a lower interest rate than unsecured loans, it provides flexibility for taking out a loan and paying it back within your credit limit.

It's the best choice for paying significant expenses, including purchasing a home and renovations, and your home secures the loan as collateral. Since you're paying it back, you should use HELOC for large projects which add value.

Upon late or missed loan payments, a lender has the right to foreclose on the property and recover the outstanding amount.

How HELOC Works

A HELOC works like a credit card, with a maximum amount available for borrowing. The entire credit line is available; you only pay what you spend plus interest.

This loan does not offer you the whole amount in advance as an installment loan would, but you only withdraw what you need. Also, a HELOC loan consists of two periods:

  • The draw period - The draw period is the first phase which usually runs between five to ten years at a variable interest rate. During this period, you can borrow as much or as little as you like as long as your credit limit allows. You'll make interest-only payments when repaying the loan, but you can still pay the principal if you wish to reduce the loan.

  • The repayment period - Your repayment period begins as soon as your draw period ends, which usually runs for 20 years. The total amount of your monthly payments will significantly increase since you have to pay back the principal and interest until you clear the loan.

How to Qualify for a HELOC Loan in Bradford County, Florida

A home equity line of credit is an attractive option for borrowing against your home's equity. Like any other loan, you must meet the specific requirements set by the lender. To qualify for a HELOC, you must meet these criteria:

  • Sufficient Home Equity - HELOCs are only available to homeowners with sufficient home equity of 15% to 20%, which is the balance after subtracting your mortgage balance from the current value of your home. However, there are limits on the amount you can borrow, even with enough equity. For a HELOC, lenders base the limit on the combined loan-to-value (CLTV), which must be 85%.

  • A Good Credit Score - Lenders determine your risk as a borrower by evaluating your credit history. Considering that a HELOC is a second mortgage, the lender must be confident that you can repay it on time. A good credit score guarantees you better rates, and most lenders require a credit score of at least 620, though higher scores are even better.

  • A Low Debt-to-Income Ratio - Your DTI shows the lender that you can comfortably manage your monthly debt and can afford to take on more debt. Whether you qualify for a loan depends on your DTI, with most lenders requiring a DTI of not more than 43% to 50% to be eligible for a HELOC. However, some lenders may require lower ratios.

The HELOC Application Process in Bradford County, Florida

The HELOC application process is straightforward, provided you have sufficient equity in your home. Understanding the process helps you know what to expect and how to prepare for it. Here are the five simple steps for obtaining a HELOC in Bradford County:

  • Find a Lender - For the best HELOC, look around and compare your options with several lenders. Aside from interest rates, you should also consider the qualification requirements, repayment terms, and any additional fees the lender may charge.

  • Submit Your Application - Once you have chosen a lender, you must fill out the application form. You can apply online with some lenders, while other financial institutions require you physically submit your application at the local branch. Ensure you have all the necessary documents, such as W2, bank statements, or paychecks.

  • Home Appraisal - If the lender approves your credit and income, they will request an appraisal to estimate the current value of your home. For most homes, the lender will arrange for an assessment but expect to pay the appraisal fee that ranges from $300 to $400 on average.

  • Get Ready for Closing - Following the appraisal of your home, your lender will inform you of your HELOC approval and provide further details, including the interest rate and credit limit. If you decide to follow through with the application, be ready to sign the loan documents. The lender will add the closing costs to the loan amount.

  • Access Your Funds - Once the loan is closed, you have three business days to change your mind and cancel the loan. After completing the process, you will have access to your HELOC and can start withdrawing funds as you desire.

Small model home and house word written on wooden cube

HELOC for Condos in Florida

Florida is one of the fastest-growing states, and the condo market is booming. HELOCs come in handy when searching for a condo, but your budget is significantly tight when housing prices rise. A HELOC helps to lower upfront costs, and you can take it out as a second mortgage to reduce the mortgage payments, such as private mortgage insurance or a down payment.

When purchasing a condo using HELOC, your primary mortgage covers 75% of the buying price, and the HELOC comes in as the second mortgage covering 15% of the purchase price. Your home acts as the collateral, with the HELOC having extra monthly payments from your first mortgage.

This strategy involves taking out the two loans at once, with the HELOC usually having a draw period of ten years, and combining it with the first loan to cover your borrowing needs. And here are some of the reasons you should use HELOC for purchasing your condo:

  • You receive 90% combined financing with a maximum of 75% on the first mortgage and 15% HELOC for the second mortgage.

  • Lenders aren't allowed to examine the homeowner's association budget. Thus, they can't inspect the amount of money directed to reserves.

  • It does not matter to the lender how many condos are owned by owners and investors.

  • Verifying the Fidelity bond coverage is unnecessary when reviewing condo insurance.

  • The condo questionnaire is limited; instead of filling out a comprehensive one.

With flexible repayment terms, condos in Florida benefit greatly from HELOCs, which make obtaining one easy. You will receive a lump sum depending on your home equity, and you can access it whenever required. It is the preferred option when you don't need to cover the total cost of the condo.

Why a HELOC is Great for Divorces

A home equity line of credit is the best option for paying off your ex-spouse's equity in your home after a divorce settlement. It is possible to access your equity without affecting your first mortgage. You can apply for a HELOC and buy out your spouse if you want to remain with the house and don't have the cash.

You will take out the HELOC as a second mortgage with different terms and rates from your primary mortgage. This way, you won't affect your first mortgage interest rate, and you won't have to refinance your home and lose the favorable rates. It also allows you to lock in rates after closing, eliminating the worry of fluctuating rates.

HELOCs are Great for Home Improvement Projects

A HELOC comes in handy when you cannot afford your renovations, which provide a great return on investment while adding value to your home. Unlike most renovation loans, HELOCs depend on the current value instead of the future value, and closing costs are minimal.

Renovating your home means making upgrades that increase its value, with the added benefit of getting tax deductions. But you must meet specific conditions for the tax to be deductible, only on the first $750,000 of the home loan, including your HELOC and the primary mortgage.

The Pros of a HELOC Loan

Most HELOCs allow you to borrow up to 85% of your home's value, less any current mortgage payments. This means you must have a significant amount of equity in your home. If you're considering applying for a HELOC, here are the benefits you can expect:

  • No restrictions on how to use the funds - Your home is the collateral for the loan, and you can use HELOCs for more than just home improvements. You can use these funds for various purposes, such as buying investment properties, paying for education, and settling high-interest debt. But HELOC works best for financing worthwhile long-term projects.

  • Relatively low-interest rates - A HELOC is an excellent option if you're looking for a loan with lower interest rates than a personal or unsecured loan. You only borrow what you need and only pay interest for the amount you use. You usually get a lower interest rate since your home guarantees the loan, offering more flexibility with borrowing.

  • You can lock in your rate - You can lock your interest rate on your outstanding amount to protect yourself from rising interest rates. Although it may come with some fees or a high-interest rate, it offers you more stability in times of increasing interest rates.

  • The Interest is tax-deductible - Tax deductions are available with a HELOC, and you can claim interest deductions on home improvements you make using a HELOC. Specifically, the interest is deductible if you use the proceeds to build, renovate, or buy a house. But you can only deduct the interest paid on both mortgages up to a certain amount.

  • Pay back only for what you use - In the same way as a credit card, you will only have to pay what you use, including the interest on the HELOC. The flexibility of HELOCs makes them ideal for projects whose total cost is unknown in advance. A HELOC allows you to access money when needed without paying interest on unused money.

Why HELOC is Better than Cash-Out Refinancing

Both HELOCs and refinancing allow you to tap into the equity in your home, with the main difference being that a HELOC acts as a second mortgage while refinancing involves getting a larger mortgage than your current one, paying off the loan, and cashing out the remaining balance.

Here are some reasons why you should consider a HELOC instead of refinancing:

  • A HELOC allows you to take out up to 85% of your home's value compared to 80% when refinancing.

  • If you use your HELOC to improve your home, you may be able to receive a tax deduction.

  • HELOCs have lower closing costs than cash-out refinance.

  • HELOCs enable you to keep your current interest rate while receiving the cash you can use as you see fit.

When financing a project, you should choose a HELOC to make it easier to access funds with minimal costs. Taking out cash-out refinancing involves high closing costs ranging from 2% to 5% of the total loan amount, including the cash-out amount. Your current mortgage balance will increase as a result of this new loan.

5 Places to Get Ice Cream in Bradford County, Florida

There's nothing better than an ice cream treat on a hot day after spending a few hours hiking around the nature trails, fishing, or strolling around the historic towns in Bradford County. Fortunately for ice cream lovers, the county has plenty of choices in and around it.

Check out these spots for an ice cream fix in Bradford County:

  • Powell's Dairy Freeze - Powell's serves one of the best soft-serve ice creams in the county and is a must-have on a hot day. Here you'll find the best selection of old-fashioned ice cream with natural flavors, unlike the newer ones that contain a lot of additives. The coffee and the butterscotch flavors are a must-try.

  • What's the Scoop? - What's the Scoop is the spot to go for something out of the ordinary ice cream. Enjoy some of its unique specialties, including the handcrafted hybrid strawberry, sugar-free caramel sundae, and banana split. It is also a great spot to come to with kids because they have different games that will keep them busy as they wait for their orders.

  • Dink's Place - The Dink's offers a fun atmosphere for a quick snack or break. You can mix and match flavors and toppings to create your ice cream. What is interesting about this place is that their ice cream flavors change frequently, and you'll always find something new to try.

  • Strickland's Scoop - This spot is not just your average ice cream shop. They have taken their flavors a notch higher by including wine and alcohol-based flavors and also serve non-dairy options. Strickland also offers a variety of ice cream flavors, including Blue Bell. There's something for everyone with outdoor activities for the kids.

  • Carl's Ice Cream 32 Flavors - Carl's is an ice cream parlor serving 32 unique hand-scooped ice cream flavors, and they have served the community for years. You should try the vanilla chocolate swirl, the bubble gum, or the mocha almond fudge, which tastes fantastic. Apart from ice cream, they also serve cookies, waffles, and cake cones.

Bottom Line

A HELOC can be an excellent tool for borrowing money if you own a home with sufficient equity and are disciplined enough to repay the loan.

The funds are available without restrictions, and you can use the proceeds to pay for a divorce, make home improvements, or consolidate your debt. Contact a lender today to find out how to apply for a HELOC.

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.

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