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Home Equity Line of Credit in Ohio
The Ohio housing market has grown over the past decade and has allowed homeowners to build solid equity in their properties as a result. The average home sells for roughly $250,000 and appreciation has gone up tremendously over the past few years. Over 60 percent of all residents living in Ohio own their own homes, so the need for a home equity line of credit is crucial for borrowing money.
What is a HELOC?
A home equity line of credit, more commonly referred to as a HELOC, is a line of credit you can take out against the equity of your home. A HELOC works similarly to a regular credit card, but you’ll use your property as collateral so the bank can protect their assets. If you should forgo repayment or become overly delinquent, your home can be repossessed by the bank and put into foreclosure. Because of this often common problem, a home equity line of credit should be taken out carefully to prevent the bank from having access to your property.
What are the Advantages?
The main benefit of taking out a HELOC is the low interest rate and large withdrawal limit. Banks often approve credit lines for about 85 percent of a home’s value. If your home is worth $300,000, this means that you’ll have a credit limit of roughly $250,000. This is a limit you wouldn’t be able to obtain from any other credit card on the market. Most traditional credit card limits are $10,000 to $25,000, so having this large amount to draw on is ideal for emergency situations and large purchases. Another advantage to opening a HELOC is that your credit score isn’t necessarily a deciding factor when determining your eligibility. Even homeowners with bad credit scores can be approved so long as their home’s value is stable and established.
How to Apply and Find the Best Rate
To apply for a home equity line of credit in Ohio, you’ll need to find a reputable bank that offers loans and lines of credit. The application process is similar to what you’d find when applying for a credit card, but there will be additional questions regarding the value of your home, the length of time you’ve been the owner and how long you plan on living there. Most applications will be approved or denied within a month, so you should hear back from the bank regardless of whether or not you’ve been approved to open a credit line with their facility.
Current HELOC interest rates can vary from 4.5 percent to 7.5 percent, with most people being approved with a rate of 5.5 percent. Keep in mind that most banks only offer variable rate credit lines, which means that your interest rate will change according to the current Ohio housing market. It can be tempting to get locked into a HELOC when the rate is low, but this can change quickly because of the rising cost of living throughout the state.
Repayment and Fine Print
Repaying your HELOC is similar to any other credit card as you’ll have to pay back what you borrowed with interest. If you should choose to sell your home while the account is still open, you need to pay off the remaining balance of your account or risk going into collections. Ask your lender about any fine print associated with your home equity line of credit such as the specific draw period, varying interest rates and measures taken for delinquent accounts.
- Third Federal
- Flagstar Bank
- Home S&L
- Key Bank
- US Bank