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

HELOC is an acronym for a home equity line of credit. It is a line of credit secured by your property/home. HELOC provides a revolving credit line that you can use to consolidate higher interest-rate debts on other loans. A home equity line of credit often has a lower interest rate than other common loans.

Its interest rate may become tax deductible. To understand more about interest deductibility, consult your tax advisor because tax rules will likely change from time to time.

How Home Equity Line of Credit Works

When you use a HELOC, know you are borrowing against the equity in your property. To be precise, your house serves as collateral for this line of credit. Unlike the traditional home equity loan, HELOC involves borrowing a fixed amount. It is a revolving type of credit for new home buyers.

HELOC also functions similarly to a credit card. This means that when you repay your loan outstanding balance, your available credit is replenished just like a credit card. In this case, you can borrow as much or as little as you want throughout your draw period (usually ten years) up to the established credit limit at closing. Your repayment period starts at the very end of your draw period.

Home Equity Line of Credit Approval

Once approved for a HELOC, you will automatically be granted a credit limit based on your current home equity. Typically, you can borrow as high as 85% of your actual home value minus your outstanding mortgage balances.

You can draw funds from your account using a draw card or dedicated checks during your established draw period. As mentioned earlier, this draw period lasts approximately ten years. However, you may need to make minimum monthly payments on the borrowed amount.

After your draw period, you must enter a repayment period of 10 to 20 years. During the repayment period, you will not be able to access funds. Instead, you will have to repay the principal amount.

How do I Qualify for a Home Equity Line of Credit in Manatee County, Florida?

One thing remains certain regarding a Home Equity Line of Credit; each lender has its requirements. The good news is that there are a few general criteria that every lender must consider when approving your HELOC application. These general criteria include:

Equity in Your Property/Home

Quite a number of lenders in Manatee County, Florida, expect property owners to have at least 15% to 20% equity in their respective homes. This means that the amount you owe on your property should be less than the actual value of your home.

Good Credit Score

You need a credit score of mid-600s or higher to qualify for a HELOC. You will likely have a higher interest rate if approved with a credit score lower than 600.

Debt-to-Income Ratio

Most Manatee County, Florida lenders are keen on the borrower's debt-to-income ratio. With that, your lender will likely consider your eligibility based on how reasonable your debt-to-income ratio appears.

Make sure to calculate your debt-to-income ratio correctly before applying for a Home Equity Line of Credit. The lender will approve your application if your ratio is about 43% or lower. If you are lucky enough, some lenders may approve your application even when you have a debt-to-income ratio of about 50%.

Adequate Income

Of course, adequate income is necessary if you want your HELOC application to be approved. Your potential lender will take time to evaluate your average annual income to be sure that you will be able to make monthly payments without delay or difficulties.

Responsible Payment History

You must prove that you are responsible for settling your expenses. Typically, your lender will determine your timely payment history to know if you can comfortably manage and handle your outstanding debt obligation.

In case your potential lenders detect incidences of late or missed payments, they will unlikely approve your HELOC application. They may decline to approve your application because the chances of defaulting on a loan are higher. So, ensure that your payment history is in order before applying for a Home Equity Line of Credit.

What are the Interests Rates on HELOCs?

You will encounter variable interest rates when applying for a Home Equity Line of Credit. However, several lenders offer exceptions such as:

Variable Interest Rates

Just like ordinary credit cards, HELOCs have variable interest rates. Your monthly payment may vary according to the current interest rates. This payment may also vary depending on the amount you borrow at a particular time.

So, what determines the variable interest rates on your HELOCs? Publicly shared indices usually determine the exciting variability. A perfect example of such an index is the US prime rate.

Typically, the prime rate is determined by various financial institutions across the country. It is also influenced by the fluctuations experienced in federal funds rates. The economic and market conditions affect the prime rate as well. Therefore, your HELOCs interest rate may increase or decrease over a given period.

Changes in the interest rates cause changes in your monthly payment. The good news is that a legal cap highlights the increase in your prime rate in relation to your plan's lifetime.

Fixed Interest Rates

While most lenders prefer variable interest rates, a few consider fixed interest rates on your HELOC balance. Such lenders provide an opportunity to lock a fraction of your HELOC balance. They convert a portion of your HELOC into a property equity loan.

Usually, lenders that provide fixed-rate HELOC options allow borrowers to repay that portion over a given period of about 30 years. However, borrowers are expected to repay the balance by the end of a standard HELOC repayment period. Some lenders may allow borrowers to have several rate locks at any time.

Due to the existing market conditions, locking a fraction of your HELOC is a wise financial decision. This comes in the wake of too many homebuyers shifting their attention to fixed interest rates.

Typically, fixed interest rates help minimize the overall cost of borrowing during your repayment period. Therefore, if you want to stick to the fixed interest rates, you are advised to look for lenders that advertise "hybrid HELOCs" or simply fixed-rate locks.

A hand holding money and model house

A Home Equity Line of Credit Pros

As you may know, the Home Equity Line of Credit gives you an option to take advantage of your home's equity. HELOCs enable you to borrow less than you will get when you rely on home equity loans. It allows you to borrow the amount you need when you truly need it. As such, this form of loan helps avoid accumulating unnecessary debt by keeping your monthly payments lower.

That being said, HELOC provides up to 85% of the total value of your home minus your outstanding mortgage payments. HELOC will not work for you if you don't have considerable equity.

But that alone should not discourage you from applying for a Home Equity Line of Credit, especially if you want to own a home in Manatee County, Florida.

Below are some of the advantages of relying on a HELOC for condos, divorces, or home improvement:

HELOC For Condominiums in Manatee County, Florida

Once your HELOC is approved, you can get up to 75% financing on your condo in Manatee County. The 75% is usually the first mortgage on your new home. On the other hand, you may get 90% combined financing for your condo during the first and second mortgages.

This information explains why taking a HELOC is a noble idea, especially when buying a condo in Manatee County, Florida.

In general, taking a HELOC for condos in Florida comes with the following benefits:

  • Your potential lenders are not allowed to analyze the association budget. That is, they have no authority to scrutinize the funds directed to reserves.

  • There is no need to verify fidelity bond coverage when your condo insurance is being reviewed.

  • Your lender does not care or become skeptical about the investors and the number of owner-occupied.

  • You stand to enjoy up to 75% maximum home financing on your first mortgage and up to 90% combined home financing on both first and second mortgages (particularly for a primary residence).

  • HELOC process for condominiums in Florida is easier.

  • You are only required to tackle a few questions in the condo questionnaire.

HELOC is Great for Divorces

Below are the pros of HELOCs for divorces that you need to know:

  • HELOC enables divorcees to leave their primary mortgage intact.

  • HELOC serves as a second mortgage for divorces.

  • HELOC can also help with your divorce settlement payout when combined with LTV.

  • HELOC prevents you from refinancing or potentially losing a huge interest rate on your first mortgage.

  • HELOC is likely to lock in an interest rate after closing.

HELOC is a Great Choice for Home Improvements

If you are looking for home improvement, HELOC is the best choice for you, and for good reasons:

  • Unlike renovation loans, HELOC is based solely on the current value.

  • HELOC comes with low to no closing costs on the property to be renovated.

  • HELOC provides flexibility when it comes to borrowing and repaying the funds.

  • HELOC, through home improvement, increases home value significantly.

  • HELOC makes it more flexible to underwriting guidelines.

Why HELOC is a Better Option Than Refinancing Your Home in Manatee County, Florida

Even though mortgage interest rates have risen this year, a Home Equity Line of Credit still maintains lower interest rates. It also comes with lower initial costs compared to credit cards. In this sense, HELOCs are an excellent choice for ongoing projects and debt consolidation.

Another reason you should consider HELOCs a better option to refinance your project is the potential to improve your credit score. Adding HELOC to your existing credit portfolio can boost your overall credit score. All you need to do is to make timely and regular monthly payments, and your lenders will be pleased with your good financial habits.

Most importantly, choosing HELOCs over other home refinancing options gives you few restrictions on how to utilize the funds. For instance, you can use borrowed funds for travel, debt consolidation, or higher education expenses.

Quite a number of HELOCs have introductory offers for their borrowers. Examples of these offers include a lower interest rate at a given period of time or waived fees to attract new customers. These offers give you an excellent opportunity to save some money upfront. In this regard, engage as many lenders as possible, compare their interest rates and analyze their fees before applying for HELOCs.

HELOCs offer more significant amounts than typical personal loans or credit cards. The amount you can get from HELOCs depends on your home equity, given that your home serves as collateral.

Most lenders will require a loan-to-value ratio of about 80% or less. This means that debts secured by your property, including the HELOC you want to take, your primary mortgage, and other additional debts secured by your property, must not be more than 80% of your home's actual value. In a nutshell, you can borrow more money through HELOC than you can obtain from personal or credit loans.

Top Five Places to Get Ice Cream in Manatee County, Florida

Manatee County provides a conducive environment and friendly neighborhood for those looking to establish their homes in Florida. The county is home to various attractions and unique things to do both for visitors and residents.

Indeed, this part of Florida has something that suits everyone, and this includes award-winning ice cream with an assortment of flavors, toppings, and styles that assure you a delectable treat. Crafted from locally-produced ingredients, all ice cream joints in Manatee give you value for your money.

Check out these top-five spots to enjoy ice cream in Manatee County, Florida:

Wicked Awesome Ice Cream Emporium

If you are looking for delicious ice cream with flavors of your choice, Wicked Awesome Ice Cream Emporium should be your first choice. Located along 4122 Lakewood Ranch Boulevard, this joint serves ice cream and frozen yogurt at pocket-friendly rates.

It also focuses mainly on great New England ice cream, especially the dense, chewy type. Besides delivering the best ice cream, Wicked Awesome Ice Cream Emporium provide a warm and inviting family atmosphere for ice cream lovers within Manatee County.

D'Lites Shoppe

Find one of the most delicious and creamy ice creams at D'Lites Shoppe in San Marco Plaza along 8209 Natures Way. D'Lites Shoppe boasts low-calorie D'Lites Soft-Serve Ice Cream, LUV Vegan "Nice Cream," and Artisan Ice Cream.

All these types of ice cream are prepared to promote a healthy lifestyle among Manatee County, Florida residents.

Carousel's Soft Serve Ice

Unlike other joints that sell typical ice cream, Carousel's Soft Serve Icery has something unique yet enticing for you and your family.

This shop swirls up a well-guarded family secret recipe featuring frozen ice with a creamy texture. It also includes a condensed tidal wave of fruity flavor minus the dairy or fat in most ice cream varieties.

American Honey Creamery

Located just next to Parrish United Methodist Church, American Honey Creamery offers the creamiest and yummiest ice cream in Manatee County, Florida.

Also, this locally owned ice cream shop provides homemade ice cream milkshakes, cold brew floats, and delicious coffee.

Big Olaf Creamery

With more than 50 flavors at your disposal, Big Olaf Creamery on Lakewood Main Street has precisely what you are looking for.

The shop offers Sugar-Free Ice Cream, Hershey's Premium Ice Cream, Sorbets, and Italian Ice in a cake cone, a cup, waffle cone, chocolate dipped waffle cone, or homemade waffle bowl.

Final Thought

With several home financing options at your disposal, you cannot fail to secure a home for yourself or your family in Manatee County, Florida. One of these home financing loans is the Home Equity Line of Credit or HELOC.

The loan allows you to take full advantage of your home's equity. Plus, it offers you the most flexibility in what you want to borrow or when you want to repay it. You must fulfill the requirements highlighted above to make your lenders consider your application.

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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