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HELOC Education

Home Equity Line of Credit

Already own a home? Use the equity in your home to make major purchases without applying for a new mortgage.




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What is a Home Equity Line of Credit?

In a Home Equity Line of Credit agreement, or HELOC, the equity in your home is used to secure a revolving line of credit. The revolving line of credit functions similarly to a credit card, where you will be able to withdraw funds as needed, up to the approved credit limit. You will continue to be able to withdraw funds from the line of credit as long as you do not exceed the credit limit, make payments as agreed, or until the end of the draw period (typically 10 years).



How does a HELOC work?

Your HELOC is broken down into two phases - each typically 10 year terms. The first phase is described as the "draw period", which means you can "draw", or borrow, from your available line of credit (up to the amount agreed upon) as needed. Although paying back principal is advised (gradually reducing the amount of future payments with interest), you will only be required to make interest payments during this period. The interest rate is a variable rate that adjusts quarterly.

Once the draw period is over, the repayment period will begin. During this time, you will no longer be able to make withdraws from your line of credit and will be required to make payments back on your loan - paying both principal and interest. If you have a balance on the loan after the draw period is over, your interest rate at the start of the repayment period will be locked in for the remaining ten years.

If for any time during this period you decide the funds are no longer needed, you have the ability to lock in the current interest rate and begin the repayment phase of the loan. If you chose to do this, you will not be able to draw off of the available credit anymore, but converting the loan into a fixed rate could be a great way to take advantage of a low rate.


Why should I get a HELOC?

Because a HELOC uses the equity in your home as collateral, inability or failure to make payments could result in foreclosure - making it very important to use a HELOC selectively. Although a HELOC could be used to fund a variety of needs, we advise borrowers to use the money for reinvestment purposes that will yield a positive return, like:

  • Home Improvements
  • Debt Consolidation
  • Purchasing a new home or investment property
  • Securing the down payment funds you need to purchase a new home, without selling the old home first or getting a bridge loan.



About our HELOC
Typically, we allow qualifying homeowners to borrow up to 85% of the equity in their home. In addition, our HELOC offers:

  • Easy access to funds through Equity Access checks
  • Same rate regardless of your balance
  • Rate as low as 4.5 APR*



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Review important information and terms of your HELOC plan.


‌‌View All Rates & Mortgage Options
Take a look at current rates and additional loan options

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*APR = Annual Percentage Rate



CONTACT CINFED

Cinfed Credit Union
4801 Kennedy Avenue
Cincinnati, OH 45209
(513) 333-3800
Routing #242076656

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