New Jersey may be a small state, but there are millions of people who call it home. The current housing market in New Jersey is booming, with over 200,000 houses selling each year. The average home price for the state is currently $300,000 since appreciation values have gone up over time. Despite the fact that the real estate industry has suffered in the past, New Jersey is making a huge turnaround in terms of home sales and increased property value. Considering about 50 percent of all people living in New Jersey are homeowners, it’s not uncommon for a family to take out a home equity line of credit.

What is a Home Equity Line of Credit?

Home equity lines of credit, also known as a HELOC, is a way to borrow money against the equity of your home. Unlike a home equity loan that provides you with a lump sum of money all at once, the line of credit is used similarly to any other credit card you probably have. You’ll withdraw on the account whenever it is needed and you’ll need to pay back the amount with interest. Your home is used as collateral to protect the bank in case you do not pay the borrowed amount back within a specific time frame.

What are the Benefits of Taking Out a HELOC

Taking out a home equity line of credit is beneficial to those who have bad credit and wouldn’t otherwise be approved for a credit card. The bank uses your home as its collateral and doesn’t necessarily take the owner’s FICO score into consideration. This means that even if you have a poor score or no credit at all, you’ll more than likely be approved for a new line of credit. Another advantage of taking out a HELOC is that you’re able to borrow any amount of money that you need. Most banks will allow you to borrow up to 85 percent of the appreciation value of your home, giving you a large amount of cash readily available at any time.

How to Apply and What to Know About the Process

Most banks in New Jersey offer home equity loans and lines of credit. The key is to find a bank that offers these credit lines at an affordable rate. Like any other credit card, you’ll have an interest rate attached to your credit line. The majority of banks will offer a variable rate that changes according to the current housing market in New Jersey. Other banks offer fixed rates that stay the same for the years your line of credit is open. The application process is identical to what you’d find with any other credit card, but there will be additional application inquires regarding your home, its value and the length of time you’ve been the owner. You should expect to hear something back from the bank within a month of submitting your application.

Interest Rates and Repayment

The current national average for HELOC interest rates is 5.22 percent. This rate will obviously differ depending on the specific bank you choose to go to for the credit line. Some banks will take your credit score into consideration when determining the interest rate while others will put more emphasis on your home’s value. You will need to repay the credit line in full if you should ever sell your home while the account is still open in your name. Whenever you borrow money using the HELOC, you’ll have to pay it back over the course of several months with interest included. HELOCs have a specific draw period that is utilized to prevent people from taking more than what their home is worth.

Banks in NJ Offering HELOCs

• Third Federal
• Flagstar Bank
• PNC
• TD Bank
• Sovereign Bank
• Wells Fargo