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

For most people in the United States, their home represents their most significant single investment and the most critical asset in their portfolio. Investing in property can be a great financial move, not only because you will save on rent costs but because the real estate market is generally known to be an excellent long-term performer.

Even so, houses cannot be treated in the same way other stores of value, such as bank accounts, can be treated, meaning that it can be tough to access their value in case you wish to access it for whatever reason.

However, a loan option is designed to help people in such situations. Home Equity Lines of Credit (HELOC loans) are loan products that allow you to borrow money from a lender on the strength of the value you have on your house, with equity here representing the difference between the mortgage you owe on your property and its present value on the real estate market.

In this piece, we'll explore the world of HELOC loans in Palm Beach County, Florida, highlighting what they are, how they work, how to qualify for them, and how you can use them to your advantage in different financial scenarios.

Let's dive right in.

What are HELOC Loans?

Home Equity Lines of Credit are a form of second mortgage (loans you can access while holding a primary mortgage on your property), allowing homeowners to access additional funding against the equity they hold on their property.

They will receive this money in the form of a line of credit, and they can use it for various purposes such as education, home improvement, and the repayment of high-interest-rate credit card debt.

The HELOC Draw Period

Once you successfully apply for a HELOC, you will enter into what's referred to as the Draw Period, during which time you will have the freedom to pull money out of your HELOC fund in much the same way as you would a checking account.

You can borrow from this line of credit as you need to while making minimum payments or interest-only payments on the borrowed amount. Should you reach the limit on your line of credit, you will have the option of refinancing your HELOC or paying off some of the debt before you resume borrowing once again.

Why HELOCs are a Popular Financing Option in Palm Beach County, Florida

They are an attractive alternative to traditional refinancing options for several reasons, including:

Lower Interest Rates

HELOCs allow borrowers to access cash that enables them to consolidate their existing debt so that they will pay less interest on them, saving them money in the long run. Also, because HELOC loans borrow against your existing home equity, they typically carry much lower interest rates than Home Improvement loans.

This is one of the factors that make HELOCs more popular than standard Home Improvement loans as well.

Freedom to Spend as You Wish

One of the significant drawbacks of loans and financing options in roughly the same bracket as HELOCs is that they place constraints on what borrowers may spend them on.

With HELOCs, you can choose what you spend your money on, whether paying off debt, renovating your home, paying for college tuition, etc. This flexibility is rarely encountered with lower interest rates, making HELOCs very attractive.

Large Loan Amounts

Home Equity Lines of Credit function much like second mortgages, meaning they can be very substantial depending on your property's value and needs.

This can be especially useful in situations that may be financially crippling such as divorce proceedings, sudden illnesses, and so on.

Tax Deductibility

HELOCs may fall under a tax-deductible bracket depending on the use you put the money to. Should you take out a HELOC for home improvement purposes, for example, you will be eligible for a tax break to the tune of the interest you've paid on the loans, which might accrue to several thousands of dollars in many instances.

Before the Tax Cuts and Jobs Act of 2017, you could deduct the interest paid on HELOCs regardless of what you spent the funds on.

Flexible Loan Limits

Most second-mortgage facilities will set hard limits on how little or how much you can borrow, leading to potential default when borrowers take out more than they need or fail to meet the problems at hand when the amounts are too low.

However, Home Equity Lines of Credit offers borrowers a way to access the exact amount of funding they need to take care of their needs, protecting them from the pitfalls of over- or under-borrowing and unnecessary interest payments.

This is a significant benefit in scenarios where you might not know what a project or investment will cost you initially.

Calculating your Potential HELOC Amount

Once you approach your lender of choice, there's a quick way to try and determine what HELOC amount you might qualify for. You will first need to find out what your Loan-to-Value (LTV) ratio your lender is willing to extend to you.

Let's say your house is valued at $500,000, and you owe mortgage payments of $50,000.

If you are offered a 70% LTV, they will be willing to give you a HELOC credit limit of 70 percent of the equity you possess on your property.

  • You will first need to multiply the value of your home by the LTV percentage offered to determine the maximum amount of borrowable equity.

  • Your second step will be subtracting what you still owe on your primary mortgage from your first result.

Your HELOC limit calculation will thus appear as follows:

  • 500,000 x 70% = 350,000
  • 350,000 - 50,000 = 300,000

Your potential HELOC credit limit, in this case, will be anywhere up to $300,000.

The Availability of HELOCs for Condos in Palm Beach County, Florida

Florida's real estate scene is famous for its proliferation of condos, making it a vibrant market for mortgage loans and HELOCs. There are several advantages condo owners in the state will enjoy should they ever need to take out a HELOC, including:

  • Flexible underwriting - When lenders review your insurance paperwork before extending your line of credit, they will not insist that you have fidelity bond coverage, unlike most other states, which will save you money.

  • No association budget reviews - In Florida, lenders are not mandated to review or scrutinize your records to determine how much of the funds you take out will be directed to reserves. This privacy makes it attractive to investors and shareholders who prefer to keep out of the limelight.

  • 75+15 financing - If you wish to apply for a HELOC on your primary residence, you will be allowed a 75 percent limit on your first credit line; on your second application, this can go up by 15 percent if you make it out on your second mortgage. This is significantly more generous than most home loan products available today.

A hand holding a piece of paper with HELOC word

How HELOCs can Help During a Divorce in Palm Beach County, Florida

When going through a divorce, the last thing you probably need is more stress. One of the biggest problems comes when it is time to divide shared assets between the two contesting parties. Should the court order that each spouse is entitled to 50 percent of the house, you might find yourself forced to sell your property to obtain the required equity.

Selling your house under such circumstances will typically lead to a loss in equity after removing commissions, taxes, and other fees. You will then have to look for and purchase another home, incurring further losses after mortgage rates, closing costs, and agency fees are taken out.

HELOCs present a great alternative in this situation, as you can access anything up to 100 percent of your home's value in cash, depending on how far along your mortgage payments you are.

The refinancing option is less than ideal because you will incur higher interest rates on your mortgage, costing you a substantial amount of money down the road.

By taking out a HELOC, you can obtain the funds you need to pay off your divorce settlement without incurring unnecessary costs and changing the terms of your first mortgage.

Best of all, you will retain the home with all its value intact. This makes home equity loan financing an elegant solution for people undergoing divorce proceedings.

Why Choose HELOCs for Home Improvements in Palm Beach County, Florida

There are various reasons why people choose HELOCs when thinking about making home improvements and renovations to their property. These include:

  • Current valuations - In contrast with other financing options, such as renovation loans, HELOCs can be obtained based on the current value of your property.

  • Closing costs - Home equity lines of credit can be obtained at meager closing costs. Before processing your application, you might have to look around for a lender that does not require an appraisal. If your lender insists on this step in the procedure, the overall costs you will face will be significantly lower than you would otherwise be.

  • Repayment flexibility - HELOCs can be obtained with minimal obstacles and conditions from most lenders, and their repayment terms are much more flexible and open to recalibration than other loan types.

  • Increased home value - improvements made to your property will likely result in the appreciation of your home's resale value, making HELOCs for home improvement an easily accessible, low-cost way to not only improve your quality of life but potentially make a profit should you ever wish to sell your property.

The Best Places to Get World-Class Ice Cream in Palm Beach County, Florida

Palm Beach is the third most populous county in Florida, with over 1.5 million people inhabiting it. When you combine this with the fact that it is also Florida's wealthiest state in terms of personal per capita income, it's not hard to imagine that Palm Beach might like the finer things in life.

This surely applies to its ice cream preferences as well. If you're considering moving to Palm Beach, here's a quick guide to some of the country's best ice cream parlors and outlets.

Sant Ambroeus

The Gran Cafes of 1950s Italy inspired this high-class Italian restaurant. It specializes in high-end Milanese hospitality and cuisine. Aside from its fine dining facilities, the establishment hosts a cafe, bar, and an exquisite gelateria that is famous for serving some of the best gelatos in Palm Beach, if not Florida.

Their gelatos come with two fresh, delicious cookies from their in-house bakery, and you will have the luxury of choosing between their indoor and outdoor seating areas to enjoy your treat. Particular favorites for many residents are their hazelnut gelatos and their coffee affogato, an espresso poured out over a scoop of ice cream.

Angie's Epicurean

As the name might suggest, Angie's Epicurean is a gourmet confectionery that aims to deliver the most eco-friendly, organic, plant-based experiences possible. Customers can choose between sophisticated flavors topped off by unique finishings, such as cacao nibs, quinoa pops, rose petals, mini mochis, hemp seeds, goji berries, and many more.

While Angie's Epicurean is famous for its exuberant toppings (their pistachio ice cream topped with Choco quinoa pops and rose petals is not to be missed), they are more widely regarded for their undeniable dedication to delivering creations that align with their priorities of authenticity, animal kindness, and sustainability.

Sloan's Ice Cream

This is a must-visit ice cream shop if you have a sweet tooth. It's a colorful, extravagant parlor whose irresistible aroma pulls in hundreds of clients daily. It features a fascinating thematic decor that's a delight to the young.

Come in for all your sundaes, giant cones, milkshakes, coconut scoops, or traditional ice cream treats. Apart from their ice cream, they also serve up a variety of baked treats, chocolates, and candies. Be sure to try out the Luscious Sloan's Dark Chocolate ice cream creation that features pecans, brownies, peanuts, almonds, caramel, and toffee.

La Michoacana Natural

This unique ice cream parlor has a rich history beginning in 1940 when it was first opened up in Tocumbo, a small municipality in the Mexican state of Michoacan. Over many years, it has become a franchise that has permeated the United States, with Florida being one of its most prominent locations.

The West Palm Beach location is well known for its 'helados' (ice creams), although they also serve great 'paletas' (popsicles).

They also serve a host of cold treats made from a foundation of water, milk, fresh juices, and milkshakes—La Michoacana Natural's collection of authentic Mexican flavors, which you will hardly find anywhere else. These include mamey, chongos, queso, ron pasas, guanabana, and others.

Even so, they also have traditional flavors such as chocolate, mango, vanilla, lemon, coconut, and strawberry on hand to satisfy any sweet tooth that comes along.

Lily's Ice Cream

This family-owned ice cream parlor prides itself on serving the most delicate flavors made using ingredients of the highest quality. The family makes their ice cream by hand, a remarkable skill they picked up during their 14-year sojourn in Israel.

This exceptional family has been worldwide, and its range of flavors reflects its wide inspiration. The menu includes plenty of European and South-American flavors while training all the classics we know and love.

You won't have trouble if you're looking for a gluten-free, vegan, or sugar-free alternative. While they have plenty of fun flavor and topping options for the holidays and special occasions, Lily's Ice Cream fans rave about their Espresso Coffee Flavor ice cream, a gluten-free, delicious, and unbelievably creamy delight.

Final Thoughts

Owning a home is a dream come true for many, but it often puts a strain on people's finances, with mortgage payments making up a significant chunk of most people's monthly budget. This often means that readily accessing funds is a costly, if not impossible, mission.

Home Equity Lines of Credit represent an efficient, effective, and affordable solution to this problem. These multi-purpose funds can be directed towards whatever your needs are with minimal fuss and at meager prices. Should you ever need some extra funds in your account, contact your lender of choice for a HELOC. You'll be glad that you did.

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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