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Home Equity Line of Credit in Maine
Maine is a gorgeous, yet small northeastern state that is home to over one million people. The average home in Maine sells for about $150,000, making it one of the more affordable states in America. Appreciation values have gone up tremendously in the past decade with Barharbor and Eastport being the two most affected cities by this change. Over half of all adults living in Maine are proud to call themselves homeowners, which is why you’ll find an increase in the amount of HELOC accounts being open.
Learning More About HELOCs
A home equity line of credit, also known as a HELOC, is a way to borrow against the equity in your home. Unlike a home equity loan that provides the owner with a lump sum of cash, the credit line is used similarly to a credit card. The bank will issue you cards and checkbooks that you can use whenever you need to make a purchase. You will then be required to pay that amount back with interest. What makes a HELOC different from traditional credit cards is that your home is being used as collateral.
Benefits of Opening a Credit Line
Opening a HELOC can seem scary at first because you’re essentially putting the security of your home at risk, but it provides homeowners with a larger lump sum of money to use in times of need. A typical credit card has a limit of about $20,000. Once you hit this limit, you will no longer be able to use your card. Because the HELOC is equal to about 85 percent of the value of your home, you’ll have hundreds of thousands of dollars to utilize whenever it is needed. Interest rates on HELOCs also tend to be less daunting. Maine interest rates for home equity line of credit accounts are currently 5.5 percent, whereas the average credit card rate is 15 percent.
The Application Process
HELOC accounts require additional application information when compared to credit cards. With a normal credit card, you can apply online or through the mail. With a HELOC account, you may need to visit your local branch to begin the application process. When filling out the application, you’ll be required to provide information pertaining to your home and property. The bank will ask for mortgage payment statements, titles and deeds to ensure that you are the owner of the home. Most banks offering HELOCs will want their applicants to be vested in their properties by about 40 percent. You should hear back from the bank about your application within a month or two.
The benefits of opening a home equity line of credit are apparent, but there are some drawbacks to this method, too. Because you’re using your home as direct collateral, the bank has the right to take your home if your account becomes delinquent. This can be devastating to families who would otherwise have nowhere else to live. It is crucial that you use your new line of credit responsibly. It can be tempting to borrow against the equity of your home for a variety of different things, but you’ll be paying more back in return because of the interest.
Banks in Maine Offering HELOCs
- Key Bank
- TD Bank
- State Farm
- Bank of America
- U.S. Bank National Association
- First National Bank