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Home Equity Line of Credit in Nebraska
There are almost two million people living in Nebraska. Over half of all residents living here own their own properties. Most homes sell for roughly $150,000, making the state one of the most affordable in the country. Because of the large number of homeowners, it’s easy to see why home equity line of credit accounts are so common. Understanding the process of opening a HELOC will give you the opportunity to see if it’s the right decision for you.
What Exactly is a HELOC?
A home equity line of credit uses the equity you’ve built in your home as collateral. The bank will only approve applications for those who have vested at least 40 percent into the total value of their property. Unlike a home equity loan that provides you a large lump sum of cash right off the bat, the credit line is used similarly to a credit card. You’ll have a specific draw period available and can withdraw about 85 percent of what your home is worth.
What are the Benefits of Opening a Home Equity Line of Credit
One of the most beneficial advantages to opening a HELOC is that you’re able to have access to a larger sum of money. Typical credit cards allow for about $20,000 of a draw limit before the card becomes useless. When you open a credit line through the equity in your home, you’ll have access to tens or even hundreds of thousands of dollars. The bank will look at your home’s worth more than they will your FICO score, so this option is also good for those with bad credit scores.
Other Things to Know
Your credit line is tied directly into the equity of your home, so you’re essentially using your home as collateral. This means that if you become overly delinquent on your bills, the bank can take possession of your home to cover its losses. It can be risky to put your home on the line just for a bit of extra cash, so you’ll need a solid game plan for how the credit card will be used. The last thing you want to do is spend that money on frivolous expenditures leaving you stuck with a huge bill and interest included. All credit lines have a draw period where you’ll be able to have access to that money. Once the draw period ends, you’ll have the option to reapply to open the account.
Applying and Interest Rates
The current interest rate attached to Nebraska HELOC accounts is 5.5 percent. Your rate will vary depending on a range of different factors. The bank you choose may offer variable rates that shift according to the local Nebraska housing marketing. Other banks will take your credit score into consideration and will base your rate on your financial history. Comparing banks is the best way to find a great rate and to learn more about their establishment’s specific guidelines regarding HELOCs.
The application process involves a thorough financial background check as well as providing the lender with home-related information. Don’t be surprised if the bank asks for payment history, deeds and titles in your name. These documents are all necessary for the bank to make their decision on whether or not you’re a good candidate for their HELOCs.
Here is a list of some of the most popular banks in Nebraska offering home equity line of credit accounts to clients:
- First National Bank
- Bank of the West
- American National Bank
- United Nations