New Hampshire is a small state that is home to only one and a half million people. While it may be the one of the more progressive states in America, it tends to be one of the most expensive. The average home in New Hampshire sells for approximately $260,000. The cost of living throughout the state is quite high, so only about 40 percent of people own their own properties. Because of the financial problems many living here face, it’s not uncommon for a homeowner to take out a home equity line of credit.

What You Need to Know About HELOCs

A home equity line of credit, also known as a HELOC, is a credit card you take out against the equity you’ve built in your home. The majority of banks will approve HELOCs for 80 to 90 percent of a home’s value. This means that you could potentially be sitting on a line of credit worth hundreds of thousands of dollars. Typical credit cards don’t offer that large of a draw limit, so this is why you’ll notice most homeowners opening HELOC accounts as opposed to opening a credit card.

Reasons to Take Out a Home Equity Line of Credit

One benefit to taking out a home equity line of credit is that you have a larger draw limit. The average credit card is often approved with a limit of about $20,000. The HELOC is worth a lot more than this, giving you the available funds you need in emergency situations. Along with this draw limit, you’ll have a lower interest rate. Credit cards have an average rate of 15 percent, but your HELOC can be approved with a rate as low as 4.5 percent. The rate you’re able to obtain depends solely on the bank you’ve chosen to go with. Another advantage to taking out a HELOC is that it’s ideal for people with average or poor credit scores. The bank puts more emphasis on your home’s value than it does on your current FICO score.

What You’ll Need to Apply

You’re going to need to have a variety of property-related documents before you’re able to apply for a new HELOC. If you have not had your home professionally assessed in over five years, you’ll need to call the county assessment department to have this done. You also need to prove that you’re the owner of the home and have vested at least 40 percent of the total value of your property into the land. Applications can take anywhere from a few weeks to a few months to be fully approved. Once your account has been approved, you’ll receive a credit card and checkbook that you can use to make any type of purchase.

Fine Print Details

Despite the fact that HELOCs are ideal for most homeowners because of their low rates and high draw limits, they can also be quite risky. You’re putting your home on the line to open a credit card. If your account becomes delinquent and you fail to make payments in a timely manner, the bank has the right to take possession of your home. While this might seem a little extreme, many homeowners have lost their properties because of their home equity line of credit accounts. Before taking out a line of credit with a bank and using your home as its collateral, determine what the credit card will be used for and ensure that you’re financially stable enough to repay what you borrow.

Banks in New Hampshire Offering HELOC Accounts

Here are some banks in New Hampshire offering HELOC accounts:

• Third Federal
• Bank of America
• Santander Bank
• East Boston Savings Bank
• United Nations Bank