(Mar 26, 2023)
For those who already own a home in Martin County, you'll be happy to know you have access to a HELOC loan, provided you've built up at least 20 percent equity in your home. Equity refers to the portion of your home you own outright or have paid down significantly. For example, if your home is worth $200,000 and you owe $150,000 on your mortgage, you have $50,000 in equity.
If this is the first time you've heard about HELOC loans, don't worry. This article will explain what HELOCs are and how they can be used to your advantage.
What Is a HELOC Loan?
Most HELOCs have what's called a draw period. This is the period of time during which you can borrow money against your HELOC. The length of the draw period varies, but it is typically between five to ten years. Once the draw period ends, you can no longer borrow any funds against your HELOC.
The repayment period is usually 20 years, though this may vary depending on your lender. During the repayment period, you will not be able to access any more funds from your HELOC unless you refinance the loan. However, you will still be required to make payments on the outstanding balance of your loan (principal plus interest).
Today, HELOCs are among US homeowners' most popular home loans, with the current HELOC debt valued at $320 billion.
The 75-15 HELOC for Condos in Florida
Now that you know a little more about HELOCs let's look at the 75-15 HELOC loan specifically for condos in Florida.
With this type of HELOC, you can borrow up to 75 percent of the value of your primary residence (condominium unit) through a first mortgage. You can also finance up to 90 percent of the value of your home when you combine your first and second mortgages.
The 75-15 HELOC loan is especially appealing to borrowers looking for a limited review of their condo budget (also known as a 'light review'). With this loan, your lender isn't permitted to scrutinize the association budget. In other words, you don't need to worry about lenders analyzing funds directed to reserves.
This is essentially a limited condo questionnaire that you to fill out instead of a full one. You get to access funding much more quickly than you would with a traditional HELOC loan. You'll also be glad to know that lenders aren't interested in verifying fidelity bond coverage to approve you for the loan.
What Are the Benefits of Taking a HELOC?
HELOCs are packed with benefits, hence their appeal to homeowners looking for funds. Here are some of these benefits.
The Loan Application and Approval Is Quick and Easy
Ever tried applying for a loan? If so, then you know just how frustrating the process can be. It often takes weeks (or even longer) to hear back from the lender, only to be told that you don't qualify. HELOCs are different.
Because your home equity secures HELOCs, lenders are more likely to approve your loan. Many HELOC applications are approved much faster. This is especially true if you're applying for the 75-15 HELOC loan for condos. Sometimes, the approval could take as little as a few days.
HELOCs Offer More Flexibility Than Most Loans
HELOCs are different. Most loans come with strict terms and conditions that you must adhere to. This is because HELOCs give you the freedom to borrow as much or as little money as you need, up to your credit limit.
This flexibility is beneficial if you're facing a financial emergency and need access to funds quickly. With a HELOC, you can withdraw the money you need from your line of credit and repay it over time.
You Only Pay Interest on the Money You Borrow
HELOCs are different. With most loans, you're required to make fixed monthly payments regardless of how much you borrowed. HELOCs work like credit cards because you only pay interest on the money you borrow.
For example, let's say you're approved for a HELOC with a $10,000 credit limit. If you only borrow $500, you'll only be required to pay interest on the $500 you borrowed – not the entire $10,000.
HELOCs Offer Lower Interest Rates Than Most Loans
HELOCs typically offer lower interest rates than most loans – including unsecured loans, such as personal loans. That's because HELOCs are secured by your home equity, reducing lenders' risk.
Additionally, HELOCs often come with introductory rates that are even lower than the standard HELOC rate. Check with your lender to see if you qualify for special introductory rates.
HELOCs Allow You to Access Your Equity Without Selling Your Home
A HELOC could be a good option if you need cash but don't want to sell your home. HELOCs allow you to access your home equity without selling your property.
Keep in mind, however, that taking out a HELOC will increase your mortgage debt. As such, you'll need to make sure you can afford the additional monthly payments before taking out a HELOC.
You Have Access to a Lot of Money
If you're among the 45 percent of homeowners in America who are equity rich, then you probably have a lot of money tied up in your home.
A HELOC allows you to borrow as much as 80 percent of your home equity, giving you access to a large amount of cash. And if that's not enough, some lenders will let you access up to 90 percent of your home equity.
Of course, it's not only those with 50 percent equity or more who can benefit from HELOCs. As we pointed out earlier, as long as you have at least 20 percent equity, you can qualify for a HELOC. Depending on the appraised value of your home, that could be a significant amount of money.
HELOCs Offer a Fixed-Rate Option
If you're worried about rising interest rates, then you'll be happy to know that HELOCs offer a fixed-rate option. With this option, you can lock in a low-interest rate for the entirety of your loan term – regardless of future interest rates.
This is a massive benefit, as it allows you to budget for your HELOC payments years in advance. Additionally, it gives you the peace of mind of knowing that your interest rate will never increase – no matter what happens with the economy.
HELOCs Are Often Tax Deductible
If you itemize your deductions, you may be able to deduct the interest you pay on your HELOC from your taxes. To qualify, however, you'll need to use the HELOC for home-related expenses, such as home improvements or repairs.
Additionally, it's important to note that the new tax laws that went into effect in 2018 have changed the HELOC deduction rules. As such, you'll need to speak with a tax professional to see if you qualify for the deduction.
HELOCs Can Be Used for Almost Anything
HELOCs can be used for almost anything – including home repairs and improvements, debt consolidation, medical expenses, etc. The only thing you can't use a HELOC for is to make a purchase that will decrease your home equity.
For example, let's say you want to use a HELOC to pay off your credit card debt. Not only will this help you save money on interest, but it could also help improve your credit score by consolidating your debts into one single loan.
HELOC loans are also helpful for couples going through a divorce who want to buy out their spouse's equity in the home. By taking out a HELOC, you can borrow the money you need to pay your spouse their share of the equity without selling the property.
Other uses for HELOCs include:
- Home repairs and improvements
- Medical expenses
- College tuition
- Business expenses
This flexibility in how to use your HELOC often lacks with other types of loans.
You Can Take Advantage of HELOCs to Boost Your Home's Value
If you foresee selling your home in the future, you can use a HELOC to make some essential home improvements that will boost its value. This is especially helpful if you don't have the cash on hand to pay for the repairs or upgrades upfront.
And because HELOCs offer such low-interest rates, you can often recoup the cost of the improvements through the increased value of your home. In other words, you can use a HELOC to make your home worth more – without spending much extra money on interest.
Steps When Applying for a HELOC
One of the best things about HELOC loans is that they're relatively easy to qualify. However, you still need to take a few steps to increase your chances of approval.
Here are the steps you need to take when applying for HELOC:
Know How Much Home Equity You Have
The first step is to find out how much home equity you have. As we mentioned, you need at least 20 percent equity in your home to qualify for a HELOC.
What if you don't have that much equity in your home? You may need to wait until your home's value increases before you can apply for a HELOC. The good news is that there are easy ways to build equity in your home, such as making extra mortgage payments or paying off your debts.
Check Your Credit Score
Your credit score is one of the most important factors lenders look at when considering you for a HELOC. HELOC lenders typically require a minimum credit score of 620. However, the higher your credit score is, the better your chances of getting approved for a HELOC with a low-interest rate.
This may also be the ideal time to check your DTI ratio. HELOC lenders typically prefer borrowers with a DTI ratio of 40 percent or less. So if your DTI ratio is high, you may want to work on paying off some of your debts before applying for a HELOC.
Shop Around for the Best HELOC Rates
HELOC rates can vary widely from lender to lender. This is why shopping around and comparing rates from multiple HELOC lenders is essential before you decide on one.
Remember, even a tiny difference in HELOC rates can add much money over time. So it's worth taking the time to find the best HELOC rate for your needs.
Apply for the Loan
Once you've found a lender whose terms and rates and terms you're comfortable with, it's time to apply for the HELOC. The application process is typically very straightforward.
You'll need to submit some documentation. This typically includes tax returns, pay stubs, bank statements, etc. HELOC lenders will use this documentation to verify your income and debts.
Get Approved for the HELOC
After you've submitted your HELOC application, the lender will review it and make a decision. If approved for the HELOC, the lender will send you a HELOC agreement.
This agreement will outline the terms of your HELOC, including the interest rate, loan amount, repayment terms, and more. Be sure to review the HELOC agreement carefully before signing it.
Start Using Your HELOC
Once you've signed the HELOC agreement, you can start using your HELOC loan. Remember, you typically have a 10-year draw period to use the loan. After that, you'll need to begin repaying the loan.
Who Serves the Best Ice Cream in Martin County, Florida?
You may be in a celebratory mood if you've been approved for a HELOC loan. And what better way to celebrate than Martin County's acclaimed ice cream? Whether you're looking for a classic flavor or something more unique, you're sure to find it in this county.
Here are some of the best places to enjoy a sweet treat:
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The Purple Spoon - The Purple Spoon is known for its artisanal and small-batch ice cream. All their flavors are made with locally sourced ingredients, so you know you're getting the freshest possible product. They also have a wide variety of unique flavors, so there's sure to be something for everyone.
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The Ice Cream Club - Head to The Ice Cream Club for a classic ice cream experience. They have a wide selection of classic and innovative flavors, so you'll find something you'll love. And if you can't decide on just one flavor, you can always get a flight so you can try a few different ones.
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Sweet Dreams Ice Cream - A local favorite in downtown Stuart, Sweet Dreams Ice Cream is the perfect place to enjoy a sweet treat. They have classic and unique flavors, so you'll find something you'll love. And if you want something a little different, they also offer ice cream cakes and other desserts.
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Two Scoops Creamery - Located in Jensen Beach, Two Scoops Creamery is a must-visit for ice cream lovers. They offer classic and unique flavors, so you'll surely find something you love. And if you want something a little different, they also offer ice cream sandwiches and other desserts.
- JoJo's Ice Cream Parlor - JoJo's Ice Cream Parlor is an excellent spot for ice cream and coffee. They have a wide selection of both ice cream and coffee flavors, so you can get your caffeine fix while satisfying your sweet tooth. And if you're feeling extra indulgent, you can get one of their ice cream-based desserts.
Apply Today and Enjoy the Benefits of HELOC Loans!
Cash tends to get tight when you need it the most. But if you're a homeowner in Martin County, Florida, you can continuously tap into your home equity with a HELOC loan.
HELOC loans offer several benefits, including lower interest rates, the ability to borrow as much as you need, and tax-deductible interest.
And with a quick and easy approval process, you can expect funds to hit your account within no time. If you need some extra cash, apply today and enjoy the many benefits these loans offer.
(Mar 26, 2023)
