North Carolina is one of the most progressive and highly populated states in America. With over 10 million people living state-wide, North Carolina has seen a huge increase in property sales over the past decade. The average home in North Carolina sells for roughly $160,000. The low cost of living and competitive real estate market makes this state a wonderful home for all types of people. Appreciation values have gone up significantly in the Topsail Beach and Henrico areas. Over half of all residents living in North Carolina own their own homes, which makes home equity loans and HELOCs incredibly common.
What is a HELOC?
A HELOC, which is short for home equity line of credit, is a credit line you can take out against the equity you’ve built in your home. Unlike a typical credit card that puts its emphasis on your FICO score, the HELOC is specifically tied into your home’s value. The bank issuing the credit line will use your house as its collateral. If you should go without paying back the account, you could have your home repossessed by their creditors. While some feel that HELOCs are quite risky because you’re essentially putting your house on the line for a credit card, they have a plethora of benefits that you’ll find to be more advantageous than traditional cards.
What are the Benefits?
A key benefit to HELOCs is that you have a larger draw limit and a longer period of time to utilize the account. Most credit cards are only approved for about $15,000, but the HELOC can be worth hundreds of thousands of dollars depending on the value of your home. The majority of banks will approve HELOC accounts for 85 percent of what a client’s home is worth. Interest rates are also much lower on home equity credit lines as opposed to your average credit card. Compared to a credit card that has a 15 percent interest rate, HELOCs are often approved with a 5.5 percent rate. This makes paying back your account easier and more affordable, especially for those larger purchases.
How to Apply and What to Expect
As long as you’re a homeowner who has owned their home for more than five or ten years and has vested 40 percent or more into the assessed value of your home, you should have no problem being approved for a new account. The application process involves a variety of information, but you’ll need to provide proof of home ownership and assessment data before the bank will take you seriously. You should hear back from the bank within a month after you send your application to them. Some banks allow you to apply for a HELOC account online through their website. Homeowners tend to find it easier to go to their local branch to talk with an accountant before applying.
The Fine Print of HELOC Accounts
HELOC accounts are great for people who need a large credit limit and have a lot of equity in their properties, but they can be risky. Before taking out a HELOC account, be sure to read any and all fine print on your contract. If you should ever sell your home while the account is still open, you’re responsible for paying back your balance in full upon the closing of your house.
Here is a list of banks found throughout North Carolina offering HELOCs:
- Third Federal
- Sun Trust
- Branch Banking and Trust Company