If you are a Tennessee homeowner with a substantial amount of equity available in your home, you may be wondering if you can and should tap into that equity through the application of a home equity line of credit. Tennessee homeowners are permitted to use home equity lines of credit, or HELOCs, to obtain equity out of their homes, and interest on these lines of credit may be tax deductible. However, before you make the decision to move forward with a loan application, it is important to determine if this source of funds will meet your financial needs and if it is the best option available for your needs and budget. A closer look at what a home equity loan is is in order.
How Much Money Can You Borrow?
Tapping into your home’s equity is not a matter to take lightly. It can result in an increase in monthly debt payments that affect your budget for years to come. It can also make it more difficult to pay off your home as part of your overall retirement plan. Before you decide to apply for a line of credit on your home, consider if you will be able to access the full amount of funds that you need. In most cases, the combination of your first lien and your line of credit cannot exceed 70 to 75 percent of the total value of the home. Therefore, you need to determine your current value of your home as well as the current principal amount of your first lien mortgage before you can determine how much money you can feasibly obtain from a home equity line of credit in Tennessee.
What Can You Do With the Funds?
With a line of credit on your home’s equity, you will have the ability to take numerous draws on the funds. This is typically completed through checks or a debit card issued by the lender. You will have a finite period of time when you can make the draws, and then the repayment period will begin. With the unique nature of a line of credit, many people will use this type of funding to pay off high interest debt and medical bills. Some will use the money to fix up their house or even to entirely renovate it. Still others may take a dream vacation or make financial investments.
What Are the Loan Terms?
After you have determined that a home equity line of credit may produce enough capital for your current financial needs, it is important to determine if the monthly payments will be affordable for you. Your payments will be based directly on how much capital you pull out of your line of credit as well as by the term and the interest rate. There are a few top lenders that offer HELOCs in Tennessee, and these include Third Federal, Fifth Third Bank, Bank of Bartlett, BB&T and others. You can easily request a HELOC quote by contacting each of these lenders individually. By doing so, you can determine if a HELOC is an affordable option for you to consider.
Tennessee home ownership provides you with the incredible ability to accrue considerable equity in your home over the years. If you have owned your home for more than a few years, there is a good chance that you can tap into your equity through a HELOC. While this option is available to many, you need to ensure that this is a wise financial move to make before moving forward. Contact lenders today to request quotes to learn more about HELOCs as a financing option.