Oregon is home to almost four million people. The state is one of the most progressive in the country and has seen a rise in real estate sales over the past decade. The majority of homes throughout the state sell for upwards of $350,000. Appreciation values have risen greatly in the Portland and Malin areas, allowing homeowners to finally build solid equity in their properties and take out a line of credit against this monetary value.

Understanding HELOC Accounts

Home equity line of credit accounts are ideal for those who don’t necessarily need a lump sum of cash like they would receive through a loan, but a credit line they can draw from at any time they need. The bank will issue borrowers a card and checkbook that can be used to draw on the account. Your HELOC is valued at about 85 percent of what your property is worth. You should ideally have vested into approximately 40 percent of your home through mortgage payments.

Advantages of Opening a Home Equity Line of Credit

A key advantage of HELOCs when compared to typical credit cards is the draw limit. Any credit card you can get through a bank will only provide a $15,000 to $20,000 limit. If you need more money and have already reached this limit, you’re on your own. HELOCs provide you with tens or hundreds of thousands of dollars in available credit. This is great for emergency situations or when you’re looking to make a large purchase and don’t want to take out a loan. Another benefit to HELOCs is the fact that most homeowners can open one up, even if they don’t have a good FICO score. Banks want to know more about your home’s value and equity than they do about your credit.

How to Apply for a Credit Line

To apply for a credit line, you’ll need to visit a local Oregon bank offering equity options. The application process requires a lot of personal and property-related information so that the bank can determine your eligibility. Once you’ve been approved, you’ll receive a credit card and checkbook in the mail. Most banks offer variable interest rates that will change according to current Oregon housing data. If you’d rather get locked into a stable rate, you’ll need to find a bank offering fixed home equity credit line accounts. The standard rate for HELOC accounts is 5.5 percent, but these credit lines can go as high as 8.5 percent. While high, this interest rate is still lower than anything you’d find with a typical bank credit card.

Other Points to Consider

Keep in mind that a HELOC puts your home at risk because it is being used as direct collateral. If your account becomes overly delinquent, your home could be repossessed by the bank to cover its losses. If you take out a HELOC, you need to use your credit responsibly and make sure you only take out what you need and are able to pay it back in a timely manner. Once you start becoming delinquent on credit card payments, it’s difficult to get out of the hole you’ve created and easy to get hit with fees, penalties and severe consequences. Other than the initial risk factor, HELOCs are ideal for people who need a larger line of credit without the high interest rate often attached with standard credit cards.

Banks in Oregon Offering HELOCs

• Third Federal
• Key Bank
• Wells Fargo
• Bank of America
• Unify Financial
• US Bank