Home Equity Line of Credit in Minnesota
The year 2016 saw the Housing Market in Minnesota indicate a considerably healthy status with a rating of 5.8 on a scale of 1-10 according to Zillow. Currently, property values stand at $223,016 with a median cost of $183,000. Experts in the real estate market have predicted a consistent growth of 45% with property values expected to rise steadily by 5.15%. The housing sector in Minnesota currently has about 25,000 properties for sale with over 2,000 houses available for rental across the cities.
Homeowners in Minnesota get billions of dollars every year in home equity lines of credit (HELOC). It’s because HELOCs provide a great way of utilizing the value of your home to finance some major expenses like upgrading your home, remodeling, wedding, school fees, and so on. Some people also use it to consolidate unsustainable high-interest debts like unsecured personal loans and credit card loans.
How does HELOC Work?
You only need to apply for HELOC once and use it anytime you want by simply writing a check. When you pay, the credit line is again replenished. The credit line can repeatedly be used, making it efficient for settling recurring bills like college fees. You also get to have a peace of mind knowing that you can access some extra cash whenever you are in need. Additionally, you only pay interest on the amount you borrow.
Benefits of a Home Equity Line of Credit
The top benefits of HELOC include:
1) Debt Consolidation
Equity lines of credit may carry a slightly higher interest rate than the original mortgage loan, but the rates are much better than those offered by short-term personal loans and credit card loans. You can use your equity line to pay off debts with higher interest rates and remain with a single HELOC debt you can pay slowly. You won’t have to worry about frequent interest rate changes. However, you should note that your property serves as the collateral for the loan. In case you fail to service your debts, the lender may be triggered to foreclose the home.
2) Interest Only Payments
HELOC lenders allow borrowers to settle their interest charges and pay the principal at a later date. This is quite essential when you’re finically starved and you want some breathing space before you settle the monthly principal amount. Most lenders don’t allow this arrangement.
3) Tax Deductible
Any interest you pay on HELOC is tax deductible, and IRS will allow you to make a claim. However, for you to qualify for the tax deduction, the amount of your debt must be below $50,000 or $100,000 for married couples if they’re filing jointly. Other revolving fund credits like credit card debts don’t qualify for tax breaks.
4) Better Credit
When your lending institution approves your HELOC and you begin to remit payments, the account will be updated to your credit records. Your payment history will, therefore, affect your FICO scores that may influence your ability to access some services like insurance and other loans. By paying your HELOC loan promptly, you can significantly improve your credit rating. It’s also advisable to charge less than 30% of your HELOC spending to improve your credit scores further.
Some of the banks that provide HELOC include the FirstBank, Key Bank, the US Bank, Bank of the West, and Vectra Bank. Take your time to shop around and compare rates before settling on a particular lender. You ma first contact your bank and see if there are offering some discounts for loyal customers.