{"id":2640,"date":"2025-03-25T07:03:12","date_gmt":"2025-03-25T21:03:50","guid":{"rendered":"https:\/\/www.noblecu.com\/wph\/workarea\/?page_id=2640"},"modified":"2026-03-30T22:14:27","modified_gmt":"2026-03-30T22:14:27","slug":"financial-tips","status":"publish","type":"page","link":"https:\/\/www.noblecu.com\/wph\/workarea\/financial-tips\/","title":{"rendered":"Noble Tips"},"content":{"rendered":"\n

Noble Tips<\/h2>\n\n\n\n
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\n \n \n <\/a>\n <\/figure>\n <\/div>\n<\/div>\n\n\n\n

What Is a HELOC?<\/h2>\n\n\n\n

A home equity line of credit (HELOC) is a line of credit that allows you to tap into your home\u2019s equity.  <\/p>\n\n\n\n

How It Works<\/h3>\n\n\n\n

Like a credit card, a HELOC is a revolving line of credit that allows you to borrow up to a certain limit, pay it off, and then borrow it again. That limit is determined by a percentage that the lender sets for you called the LTV (loan-to-value). The LTV is the ratio of how much you owe on your home versus how much it\u2019s actually worth. <\/p>\n\n\n\n

The amount of money that a bank or credit union will allow you to borrow for your HELOC will depend on what they set as their max acceptable LTV.   <\/p>\n\n\n\n

HELOC Estimation Calculator <\/h3>\n\n\n\n

To get an estimate on your Home Equity Line of Credit, use this online calculator<\/a>. Begin by entering the approximate value of your home. If you don’t know it, consider looking up the prices of homes for sale in your area to get a rough estimate.   <\/p>\n\n\n\n

<\/p>\n\n\n\n

HELOC vs. Credit Card<\/h3>\n\n\n\n

While it\u2019s similar to a credit card, a HELOC works slightly differently. One difference is that HELOCs have a time limit. First, there\u2019s the draw period. This is generally a 10-year period where you can withdraw and use the money in a HELOC. You\u2019ll often still need to make payments during this phase and those payments will go toward interest. <\/p>\n\n\n\n

Second, is the repayment period. Once you reach this period, you\u2019ll no longer be able to borrow money and will start repaying the principal and the interest you\u2019ve accumulated. The repayment period generally lasts 10-20 years. If you decide to move before the repayment period is over or you\u2019ve paid everything back, the remaining balance will be due before you close.  <\/p>\n\n\n\n

<\/p>\n\n\n\n

Qualifying for a HELOC<\/h3>\n\n\n\n

In order to qualify, you\u2019ll need to prove to your potential lender that you will be able to pay back any money you borrow. Your lender will consider your debt-to-income ratio (DTI), your credit score, and more. The lender that you choose for your HELOC does not have to be the same as your mortgage provider. <\/p>\n\n\n\n

Taking the Risk<\/h3>\n\n\n\n

Before jumping headfirst into a HELOC, it\u2019s important to be aware of the risks associated with it. First and foremost, a HELOC requires you to put your home up as collateral in exchange for the credit line. This means that if your situation changes drastically and you\u2019re suddenly unable to make your payments, you risk losing your home. You also reduce your equity in your home when you use a HELOC, as you are increasing the debt that you owe against it. <\/p>\n\n\n\n

Deciding if a HELOC is right for your situation will mean considering all of your debt, your risk tolerance, and what you want to use the money for. <\/p>\n\n\n\n

Plus, a HELOC isn\u2019t free money. There are fees associated with opening and maintaining it. Similarly, HELOCs have variable credit rates. This means that they change with market factors. You may be able to start out with a low rate at the beginning, but it could rise to something that is much less affordable. <\/p>\n\n\n\n

Is a HELOC Right For You?<\/h3>\n\n\n\n

Deciding if a HELOC is right for your situation will mean considering all of your debt, your risk tolerance, and what you want to use the money for. One of the most common uses for a HELOC is to renovate or improve your home. Interest on HELOC payments used for these purposes can be tax-deductible and may have a lower interest rate than a credit card or other loan options, though that lower rate is not guaranteed to stay. <\/p>\n\n\n\n

If you need extra funds and are comfortable with the idea of borrowing against the equity of your home, another option could be a\u202fHome Equity Loan. This loan works similarly to a HELOC but, rather than being a credit line, is a lump sum that you borrow and payback. If the risks of tapping into your home equity are too great, it may be better to seek the funds elsewhere. <\/p>\n\n\n\n

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