home improvement

What Are the Advantages of a HELOC?

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Q: I’m looking to tap into my home’s equity, possibly using a Home Equity Line of Credit. What are some of the advantages of choosing the HELOC option?

A: A Home Equity Line of Credit (HELOC) is an open credit line that is secured by the paid value of the borrower’s home. Homeowners can generally open a HELOC with up to 85% of their home’s equity, or the difference between what’s left on their home loan and the current value of it. A HELOC provides homeowners with a convenient way to use the equity in their home.

HELOCs have a “draw” period, during which time the borrower can access the available funds. That time frame generally ranges from 5-10 years. When the draw period ends, the loan will have to be repaid, either immediately or within the next 15-20 years.

Once approved for a HELOC, borrowers can spend the funds however they choose. Some plans may require the homeowner to borrow a minimum amount at each draw, keep a predetermined amount outstanding or withdraw an initial advance when the line of credit is first established.

HELOCs are often used to fund a home renovation or expansion, but they can also be used to cover any large expense, such as a medical emergency, a new business venture, a wedding, a dream vacation, an adoption or the purchase of a recreational vehicle.

Here are some of the primary advantages of a HELOC:

Only borrow what’s needed. A HELOC does not provide borrowers with a lump sum of cash. Instead, like a credit card that is only used when necessary, the homeowner can withdraw funds from the HELOC as appropriate. This makes a HELOC a great option to pay for expenses when there is not a known price tag. Also, because the borrower is only paying interest on the money they actually withdraw, they’ll have the freedom to take out a larger line of credit and decide how much of it to use later on.

Qualify for a low Annual Percentage Rate (APR). Interest rates continue to hover at all-time lows. Opening a HELOC now means qualifying for low interest rates on the line of credit. Most HELOCs have fluctuating interest rates, but some lenders allow for the possibility of converting large withdrawals into fixed-rate loans.

Flexible terms. Terms and repayment plans for HELOCs are generally flexible. During the draw period, homeowners can withdraw funds from the HELOC as needed and use the money however they please. When the draw period ends, the homeowner may be allowed to renew the line of credit and continue withdrawing funds as needed.

Monthly payments also vary. Many lenders only require borrowers to make payments toward the interest of their loan during the draw period. Once that time is over, though, the borrower will need to pay back the entire principal of the loan immediately in one “balloon payment,” or over the course of 15-20 years. This is especially beneficial if the borrower does not have the funds to pay back the loan now, but anticipates an improvement in their financial situation within the next few years.

The timeline for a HELOC can vary depending on the lender and on how much the homeowner wants to borrow, but HELOC terms can last up to 30 years.

Potential tax benefits. As per the Tax Cuts and Jobs Act of 2017, the interest paid on home equity loans and lines of credit is tax-deductible if the funds are used to buy, build or substantially improve the home of the taxpayer who is securing the loan.

Build a credit score. There’s no need for an excellent credit score to qualify for a HELOC, and on-time monthly payments can significantly boost a homeowner’s score.

Low fees. A HELOC costs little or nothing to establish. Annual fees (if any) are also low.

When life throws an unexpected curve ball or even a unique opportunity, a Destinations Credit Union home equity line of credit can be a great option. With interest rates at record laws, taking out a HELOC makes more sense than ever.

Your Turn: Why did you choose a HELOC? Tell us about it in the comments.

Sources:
https://www.bankrate.com/home-equity/pros-cons-of-home-equity-lines/
https://www.nerdwallet.com/article/mortgages/home-equity-loan-line-credit-pros-cons
https://www.cnbc.com/2017/07/31/benefits-of-a-home-equity-line-of-credit.html
https://www.mortgageloan.com/heloc-advantages
https://www.fool.com/millionacres/real-estate-financing/helocs/your-home-equity-line-credit-heloc-trap/

How to Turn Your Back Yard into an Oasis

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Image of two Charis surrounded by purple flowers in a back yard.

Most of us have spent lots of time at home this spring, and it looks like summer might not be much different. With many attractions still closed and some states seeing a surge in COVID-19 cases, safe travel will be challenging. For many Americans, this means choosing to staycation at home instead of hitting the road this summer.

A stay-at-home summer doesn’t need to be boring. You can turn your own backyard into a summer oasis without breaking the budget. Here is how to cost effectively maximize your outdoor space. From entertaining in style to keeping the kids busy, we’ve got you covered!

Upgrade your outdoor furniture

Chances are, you’ll be spending lots of time out in the yard this summer, and whether that means sunning on the patio or sipping lemonade under the shade of a tree, you’ll feel more of that vacay vibe with the right furniture. It doesn’t have to be pricey; a little ingenuity will really make those dollars stretch.

Make your outdoor space seem bigger by creating different seating areas for different purposes. Think a cozy coffee nook for mornings, a lazy hammock for getting lost inside the pages of a summer thriller, a pair of lounge chairs for catching the afternoon sun and a patio table for entertaining guests. You can even go all out and designate a small area for nighttime fireside fun.

If you’ve already got a nice patio set, freshen it up by replacing the cushions and adding some summery throw pillows for a whole new look.

Don’t forget to take a look at your outdoor lighting as you spruce up your patio and yard. Brighten up your outdoor space with some sconce lights along the walls or string up some old holiday lights for a truly festive feel.

Add a splash of fun

It may be too late in the season to think of installing an in-ground pool, but you can still have your floating fun with an above-ground pool this summer. Above-ground pools can cost as little as a few hundred dollars or as much as a few thousand for a larger, upgraded model. Most take a week or less to install. And then it’s an endless splashing summer!

Make it natural 

Yes, you’re already outdoors, but that doesn’t mean you’re surrounded by greenery. Even city slickers can add the natural touch to small apartment porches with some potted plants, a container garden or a trellis with climbing flowers. Stick that greenery wherever it can go for an added layer of relaxation.

If you want to go all-out to get that resort-like feel, consider building your own waterfall this summer. It may not be on your bucket list, but it’s a super-fun project with rewarding results.

Fun for the kids

Don’t forget to create a fun space for your kids in your backyard oasis. The sky’s the limit when it comes to outdoor play; just have fun and let your creativity flow freely. Here are some ideas to get you started:

Put up a rock-climbing wall. If your kids are climbing the walls from being home for too long, try a DIY rock-climbing kit for endless fun that also builds strength and coordination.

Build a swing set. Swing sets provide hours of entertainment, but they can get pricey. Save money without compromising on the fun factor by choosing to build a swing set yourself instead of purchasing it pre-made. You’ll have to buy materials and maybe the tools, but you’ll still come out way ahead. Plus, you can make the construction a family project that will keep everyone involved for days.

Install a backyard splashpad. Your favorite spraygrounds might be closed this summer, but you can have your water fun at home with a DIY splashpad kit. Splash pads promise hours of fun for kids of all ages.

Create a natural playspace. According to a natural playground study by the University of Tennessee, children who play on natural playgrounds, or playscapes, tend to stay more engaged than those playing on brightly colored equipment. Building a natural playspace is easy — think a small pile of sand, a set of logs arranged as stepping stones and some tall grass or plants to act as hiding spaces.

Financing your oasis

If you’re short on the cash you need to turn your backyard into an oasis this summer, Destinations Credit Union can help with a Signature Personal loan. Our terms are always favorable and our payback plans affordable. Also you may want to consider a HELOC (Home Equity Line of Credit) Put your mortgage payments to work for you today with a home equity line of credit from Destinations Credit Union. With this open, anytime credit line, we’ll help you transition your home’s equity into financing for a wide range of other needs. Call, click or stop by to discuss your options with one of our Loan Officers today.

Your Turn: Have you upgraded your outdoor space? Tell us about it in the comments.

Sources:
globalnews.ca
blog.rismedia.com
statesman.com
installitdirect.com

Is It A Good Idea To Open A HELOC Now?

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If you’re looking for a large sum of money to use for a home improvement project, or thewoman looking at computer economic devastation of COVID-19 has left you in desperate need of cash, consider tapping into your home’s equity. One great way to do this is by opening a home equity line of credit, or a HELOC. Let’s take a closer look at HELOCs and why they can be an excellent option for cash-strapped homeowners in today’s financial climate.

What is a HELOC?

A HELOC is a revolving credit line allowing homeowners to borrow money against the equity of their home. The HELOC is like a second mortgage on a home; if the borrower owns the entire home, the HELOC is a primary mortgage.

Given that a HELOC is a line of credit and not a fixed loan, borrowers can withdraw money from the HELOC as needed rather than borrowing one lump sum. This allows for more freedom than a loan and is especially beneficial for borrowers who don’t know exactly how much money they’ll ultimately need to fund their venture.

Borrowers withdraw funds (aka “draws” or “advances”) from the HELOC during a set amount of time that is known as the “draw period,” which generally lasts 10 years. Some lenders place restrictions on HELOCs and require borrowers to withdraw a minimum amount of money each time they make a draw, regardless of need. Other restrictions include the requirements to keep a fixed amount of money outstanding, or to withdraw a specific sum when the HELOC is first established. At Destinations Credit Union, we allow borrowers to borrow up to the limit that you qualify for as you need it.

How do I repay my HELOC?

Repayment of HELOCs varies, but is usually very flexible.

Many lenders collect interest-only payments during the draw period, with principal payments being strictly optional. Others require ongoing monthly payment toward both principal and interest.

When the draw period ends, some lenders will allow borrowers to renew the credit line and continue withdrawing money. Other lenders require borrowers to pay back the entire balance due, also known as a “balloon payment.” Still others allow borrowers to pay back the loan in monthly installments over another set amount of time, known as the “repayment period.” Repayment periods are generous, lasting as long as 20 years.

How can borrowers spend the money? 

While home improvement projects are popular uses for HELOCs, borrowers are free to spend the money however they please. Some other uses for HELOCs include debt consolidation, funding a wedding, adoption, dream vacation or the launch of a new business.  Current tax laws may allow you to deduct the interest on a HELOC if it’s used for home improvements.

Is everyone eligible for a HELOC?

Like every loan and line of credit, HELOCs have eligibility requirements, which help lenders determine the applicant’s financial wellness and responsibility. Most notably, the borrower must have a minimal amount of equity in the home.

Lender requirements vary, but most homeowners will be eligible for a HELOC with a debt-to-income ratio that is 40% or less, a credit score of 620 or higher and a home assessment that stands at a minimum of 15% more than what is owed.

How much can I borrow with a HELOC?

HELOC amounts vary along with three criteria: the value of your home, the percentage of that value the lender allows you to borrow against and the outstanding amount on an existing mortgage.

To illustrate, if you have a $300,000 home with a mortgage balance of $175,000 and your lender allows you to borrow against 85% of your home’s value, multiply your home’s value by 85%, or 0.85. This will give you $255,000. Subtract the amount you still owe on your mortgage ($175,000), and you’ll have the maximum amount you can borrow using a HELOC, which is $80,000.

What are the disadvantages of a HELOC?
A HELOC is secured by your home’s equity, which places your home at risk of foreclosure if the HELOC is not repaid. Before opening a HELOC, it’s a good idea to run the numbers to get an idea of what your monthly payments will look like and whether you can easily afford to meet them.

Also, many lenders require the full payment of the HELOC after the draw period is over. This can prove to be challenging for many borrowers.

Finally, if you don’t plan to stay in your home for long, a HELOC may not be the right choice for you. When you sell your home, you’ll need to pay off the full balance of the HELOC. You may also need to pay a cancellation fee to the lender.

A HELOC can be a great option now

HELOCs have variable interest rates, which means the interest on the loan can fluctuate over the life of the loan, sometimes dramatically. This variable is based on a publicly available index, such as the U.S. Treasury Bill rate, and will rise or fall along with this index, though lenders will also add a margin of a few percentage points of their own.

The fallout of COVID-19 may impact the economy for months, or years, to come; however, there is a silver lining among the rising unemployment rates and bankrupt businesses: historically low interest rates. The average APR for fixed 30-year mortgages has hovered at the low 3% for months now, and experts predict it will continue falling. The low rates make it an excellent time to take out a HELOC with manageable payback terms.

The economic uncertainty the pandemic has generated also makes it a prime time to have extra cash available for any need that may arise.

Are you looking to tap into your home’s equity with a HELOC? Call, click, or stop by Destinations Credit Union today to get started. Our favorable rates, generous eligibility requirements, and easy terms, make a Destinations CU HELOC a great choice.

Your Turn: How are you using your HELOC? Tell us about it in the comments.

Sources:
https://www.huffpost.com/entry/coronavirus-time-to-refinance-interest-rates
https://www.thepennyhoarder.com/debt/is-heloc-good-idea/
https://www.bankrate.com/home-equity/heloc-rates/

Home Improvement Hacks

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You’ve finally finished scrubbing and purging your home from top to bottom in honor ofcouple working on home improvements spring. And now, with every surface, closet, and room sparkling clean, you’re starting to see all the areas that could use a facelift. Maybe you’re hankering after a complete kitchen makeover. You might be dreaming of a fresh coat of paint for your bedrooms. Or maybe your window treatments are in desperate need of an overhaul.

The only thing standing between you and your dream home is finding piles of cash for funding it, right?

Maybe not. Lucky for you, you don’t need to spend a fortune this spring to give your house a new look. Read on for our list of home improvement hacks and learn how to upgrade your home on a budget.

  1. Cabinet makeover

Instead of dropping a ton of money on replacing your kitchen cabinets, you can give a tired kitchen a fresh new look by replacing just the cabinet fronts. You’ll pay a fraction of the price and no one will know it’s your old, shabby cabinets hiding behind those beautiful new doors.

Want to go even lower-cost? Consider painting the front of your cabinet to upgrade the look without spending much money or time. You can also replace those dated cabinet pulls with something nicer and trendier for a more modern look.

  1. Cover your countertops with contact paper

Granite countertops can be gorgeous, but they’re also incredibly pricey. Instead of taking out a second mortgage for beautiful counters, try covering them with pretty, patterned contact paper. You’ll find loads of granite lookalikes at home improvement stores and you can learn how to apply your knockoff covers neatly from DIY tutorials on YouTube. You might even fool your friends and family into thinking it’s the real thing. But don’t worry: We won’t tell anyone it’s fake!

  1. Use PVC pipes for curtain rods

Pretty curtains and drapes add a splash of color and personality to any room. You can make your own inexpensive curtains by picking up some fabric from a sewing supply store. The only issue? You’ll need rods to hang up those curtains-and if you need specific measurements and colors, that can get pricey.

Make it happen with this hack: Use PVC pipes instead of curtain rods. You can paint your pipes to match the décor of the room and hang them with inexpensive hooks that fit well. Curtains, done!

  1. Create a mirrored backsplash

All you need for this fantastic hack is a pack of self-adhesive mirror tiles. These retail for about $15 per 20-tile pack and you can find them online or at a home improvement store. Use your snazzy tiles to create a mirrored backsplash in your kitchen. Decorate with inexpensive decals to up the glam or just leave it bare. The mirrors will give the illusion of greater space and you won’t have to deal with grout and caulking. It’s a super-cheap way to make your kitchen sparkle!

  1. Slipcover your sofa

If your sofa is hopelessly stained and you’d love to update it, but can’t spare the cash, try covering it in a slipcover. You can find a leather-look slipcover to match the shape of your sofa for $100 or less. They’re not just for protection; the right slipcover will give you an (almost) brand new couch! Make sure you read reviews before purchasing, because quality really makes a difference here.

  1. Let the light in

Light fixtures can really make or break an area in your home, and you don’t have to spend a fortune to get it right. Walk through your home and take note of the light fixtures that are relics from a past life, paying close attention to highly visible areas. Then, take a trip to a home improvement store or check out sites like Wayfair and Hayneedle for trendy, striking light fixtures. For less than $100, you can give your house an entire new look!

  1. DIY paint

If the walls in your home desperately need fresh coats of paint, look no further than your local home improvement store. No, you don’t have to be a genuine DIYer to get this right; it’s fairly simple. You’ll find loads of painting tutorials on YouTube, and you’ll only have to spring for the actual paint plus a few supplies. Best of all, when you’re in charge, you can get as creative as possible. Using painter’s tape and your imagination, you can paint funky designs on your walls, like diamond contrasts, vertical and horizontal stripes, or, if you’re feeling really artsy, go for a full-blown mural!

These hacks will make your home beautiful this spring for just a bit of money. If you need more major home improvements that require serious cash, though, we can help. Call, click or stop by Destinations Credit Union today to ask us about opening a HELOC or taking out a home equity loan. We can make that happen, too!

Your Turn: Are you making home improvements on a budget? Share your best tips and tricks with us in the comments!

SOURCES:
https://www.google.com/amp/s/www.thrillist.com/amphtml/home/home-improvement-hacks-under-50-diy-home-projects
https://diyjoy.com/diy-remodeling-hacks/
http://www.architectureartdesigns.com/15-smart-hacks-that-will-save-you-money-while-remodeling-your-home/
https://www.google.com/amp/s/www.remodelista.com/posts/apartment-rental-simple-easy-budget-hacks/amp/