Many homeowners in South Dakota are proud homeowners who enjoy the benefits of ownership on a regular basis, but they also have a first lien mortgage that they are still working on paying off. Through the combination of an appreciation in property values, your initial down payment when buying the home and your regular monthly mortgage payments, you may have accrued a substantial amount of home equity. If you are thinking about tapping into that equity, you may be wondering if a home equity line of credit, or HELOC, is a good option to consider. With a closer look at what a HELOC is and how it can benefit you, you can determine if this is a good solution for your current needs.
What is a Home Equity Line of Credit?
Before you can determine if a home equity line of credit in South Dakota is beneficial for you, you must first understand what it is. A line of credit is similar to a home equity loan in that both allow you to tap into the equity available in your home. In most cases, you will only be able to borrow up to 70 or 75 percent of the home’s total value, and this includes when your first lien mortgage is taken into account. Therefore, you should have a sizable amount of equity established before considering a HELOC. Unlike a home equity loan, a HELOC provides you with the ability to take draws of the available credit line as needed. You may be provided with checks or a debit card to use to easily access the funds. You will have a firm deadline when you will need to cease using the line of credit and must begin paying the funds back.
How Can You Use a Home Equity Line of Credit?
Both a HELOC and home equity loan can be used to pay off debts, and debt consolidation is a common way these funds are used. This is because these loans generally have a competitive interest rate, and the interest is tax deductible. Because a line of credit allows you to take draws of the funds as needed, the HELOC may also be used for home repairs or renovations, to pay for expensive medical bills, to take a large trip or even to pay for the kids’ college for a limited period of time. With so many options available, you can see that this may be a great option for you to consider.
Who Issues Home Equity Lines of Credit in South Dakota?
It is important to fully explore the financing terms for lines of credit in South Dakota before you decide to move forward with this lending solution. The credit line limit, the interest rate and the repayment terms can all impact how beneficial this financing solution is for your needs. Some of the top lenders who issue home equity lines of credit in this state include Dacotah Bank, First National Bank, First Premier Bank and Bank of the West. It is wise to request a loan quote from each of these top lenders before you decide which lender to work with.
A home equity line of credit provides you with a straightforward way to tap into the considerable amount of equity that you have established in your home. It comes with tax deductions and other benefits that make this an attractive financing solution. If you are looking for a great way to obtain additional funds for a project or other plans, consider researching a home equity line of credit as a possible solution for your financial needs.