Digital HELocs¹

A home equity line of credit — or HELOC — is a revolving credit line that converts your home equity into funds you can spend on just about anything. Whereas other types of home equity loans offer a lump sum payment, a HELOC gives you a line of credit to pull money as needed.

Gaining access to an open line of credit can be preferable to lump sum loans in some scenarios — for instance, if you want to renovate your home but aren’t sure how extensive the work will be or how much it will cost once completed. Taking out a traditional loan to cover all of your renovation expenses would be very tricky in that situation because you don’t know how much money you’ll need to get the job done. A HELOC gives you the option to take out cash at any time and in whatever increments you like. The maximum amount available to you for withdrawal is directly determined by the amount of equity you have in your home.

If you choose to apply for a HELOC loan, keep in mind that you are using your home as collateral and opening up a second mortgage on your property. That means you’ll need to make two mortgage payments each month — one for your original mortgage and one for your HELOC loan. Also, that second mortgage will have interest rates that are likely variable and therefore may fluctuate significantly over the life of the loan, depending on a variety of market-based factors.

Your loan amount will be largely based on your home equity. In some cases, Owning may approve a HELOC with a combined loan-to-value (CLTV) ratio as high as 85%.

With a Owningg HELOC, you can take out a line of credit for as much as $400,000, depending on your eligibility qualifications.*

*Our loan amounts range from a minimum of $25,000 to a maximum of $400,000. For properties located in AK, the minimum loan amount is $25,001. Your maximum loan amount may be lower than $400,000 and will ultimately depend on your home value and equity at the time of application. We determine home value and resulting equity through independent data sources and automated valuation models.

When reviewing HELOC applications, Guaranteed Rate’s underwriting team evaluates a few key factors:

• Credit score: 620 minimum
• Debt-to-income ratio: 50% maximum
• Combined loan-to-value ratio: 85% maximum
• Property types: single-family houses, townhomes and condos are all eligible

Once your line of credit is open, you’re free to spend that money in a variety of ways. Some of the most common uses for a HELOC include:

• Consolidating high-interest debt like credit cards
• Covering major expenses like home renovations
• Paying for recurring costs like college tuition