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Homeowners are left with many options refinancing their home and borrowing money against the equity of their home. It’s just one of the many benefits of being a homeowner. Your home increases in value and leaves you able to pay for things you couldn’t otherwise afford using the value of your home versus the amount of money you owe on your mortgage. One of those options has long since been a home equity line of credit, which is often referred to as a HELOC. This is a specific type of loan homeowners apply for that’s not like a refinance.

What is A HELOC?

A HELOC is a very simple type of loan. It’s traditionally good for a decade before it must be repaid in full. It’s a line of credit that works a lot like a credit card. You borrow the money, you can take as much as you want from your HELOC account, and you can spend it how you like while making low monthly payments. Unlike a credit card, however, this is a loan that’s secured with the value of your home. You can take out up to 85% of the equity you have in your home and use that as a way of accessing money and funds to improve your home or pay for other things for one decade.

Are HELOCs Going Away?

The unfortunate thing about a HELOC is many big banks are forgoing this kind of financing option. No longer are you able to take out a HELOC on your mortgage if you want to work with a larger bank. As of 2015, banks such as Bank of America and Wells Fargo began making it more difficult to obtain a HELOC on your home. They decide to stop their fixed-rate offers for those who want a HELOC, which makes them far less affordable for homeowners.

They’ve begun offering them to homeowners willing to pay for them in an adjustable-rate manner, which means your payment could change at specific intervals throughout the life of your loan. This is not always the worst news for homeowners if rates don’t change dramatically, but it can be devastating if rates are going up.

What Options do Homeowners Have Now?

The good news is homeowners still have ample options available when it comes to borrowing money using their home as collateral. You can choose to shop at a smaller bank for a HELOC. They’re not doing away with this type of lending the way that big banks are doing. They still offer low rates and plenty of low payment options. Your best bet is to find a credit union with which to form a lasting relationship. These are smaller banks with a more personal relationship with their borrowers.

You can use a small, hometown bank. And you can apply for different mortgage options with big banks. You can refinance your home when rates are lower and take out the equity in your home to lower your payment and still take out the value.

Using Your Home for A Loan

Homeowners do it all the time, and there’s not really a lot of thought that goes into it. The problem is that it affects the financial future of borrowers. When it’s time to sell, you profit less since you already borrowed the equity of your home. Refinancing means it will take you a lot longer to pay off your home, and it will cost you more over time if you refinance for another 30 years after making payments for several. It’s also going to mean a lot for your retirement.

It’s a good idea to consider the future ramifications of refinancing or taking out a HELOC when you need additional funds. Can you really afford what you’re going to pay? These are loans that are available in many locations even if bigger banks are eliminating their traditional HELOC, but do you really need to put up the equity you have in your home to borrow money right now? Make the financial decision that best benefits your family, but don’t forget to consider the financial future you will live with.