Many Louisiana residents are proud homeowners who eagerly take full advantage of the benefits of home ownership. In fact, almost 64 percent of the state’s residents own their own homes, according to the U.S. Census Bureau. Home ownership allows you to write off your mortgage interest and property taxes on your federal tax returns, and this can help you to save hundreds or thousands of dollars in taxes each year. More than that, equity accumulation is a significant financial benefit as well. As a homeowner, your equity was established when you made a down payment at the time of purchase. Equity may have grown through property value appreciation and principal debt reduction with your monthly mortgage payments. If you have owned your home for more than a few years, you may be surprised by the amount of equity you now have available. Using a home equity line of credit is a great way for Louisiana residents to access that equity.

What You Need to Know About Home Equity Lines of Credit

If you are thinking about applying for a home equity line of credit, or HELOC, you may need to learn more about what this financing option is. It is often confused with a home equity loan. These two financing options are similar in many ways. For example, both have a fixed term, and they both take the second position behind your first lien mortgage. Both also have a great interest rate and use equity in your home as collateral. However, a home equity loan gives you a lump sum of cash at closing, and a home equity line of credit gives you access to a credit line. You often can access your credit line for a defined period of time using checks or a debit card. Monthly payments on the debt often begin when the initial period of time has expired.

Determining Your Available Home Equity

Louisiana residents often use home equity lines of credit for various purposes, and your mind may be racing with the possibilities. Some will use the money for something fun, such as taking a much-needed and extended vacation. Others will consolidate debt, taking advantage of the tax benefits associated with a HELOC as well as the low rate and fixed term that generate lower monthly debt payments. These are only a few of the many ways you can use the money, but first, you need to know how much money you have available through a HELOC. You can typically borrow up to 80 percent of the value of the home, and this includes the first lien mortgage on your home. Therefore, take 80 percent of the current value of the home, and subtract the current outstanding balance on your first lien mortgage. This is typically the amount available through a line of credit. However, if you have a second lien in place, it likely will need to be repaid with the HELOC.

Deciding Which Lender to Use

After you have decided to apply for a HELOC in Louisiana, you may be eager to start shopping for loan terms. There are some top lenders that issue the majority of the HELOCs in the state, and some of these include First Midwest Bank, Key Bank, US Bank, Fifth Third Bank, Huntington Bank and others. By exploring loan terms, you can see if a HELOC may be affordable for your budget.

Using a HELOC is an excellent way for Louisiana homeowners to access their equity. If you are thinking about applying for a HELOC, carefully research your equity availability and loan options to determine if this is the best option for your finances.