The Home Equity Line of Credit

What is a HELOC and How Can It Benefit You?

Two men working at a saw doing home renovations.

Are you thinking about updating your retro kitchen, consolidating credit card debt, or investing in a certification to advance your career? These are all smart financial moves—but they come with a price tag. Enter the Home Equity Line of Credit (or HELOC) comes in, a flexible financing option that can help you achieve your goals.

Key Takeaways: A HELOC offers flexible, revolving access to funds as needed, while a Home Equity Loan provides a lump sum with fixed payments over time—both using your home’s equity to finance major expenses. Both are ideal for renovations, education costs, debt consolidation, auto purchases, and more.

Understanding HELOC

What is a HELOC?

A Home Equity Line of Credit (HELOC)allows you to borrow against the equity in your home. Your home equity is the portion of your home that you own. In other words, it is the difference between what your home is worth, and what you still owe on your mortgage. A HELOC works somewhat like a credit card, in that it is a revolving line of credit that you can borrow from, repay, and borrow again, but usually at a lower interest rate than a credit card.

HELOC vs Home Equity Loan

The main difference between a HELOC and a Home Equity Loan is in the way you access funds:

HELOC: Borrow only what you need with the flexibility to draw and repay multiple times.
Home Equity Loan: Receive a lump sum upfront, repaid in fixed amounts over a set period of time.

The Benefits of a HELOC

There are quite a few benefits to having a HELOC account.

Immediate Access: Once you apply and qualify and get the account all set in place, it’s available for whenever you need it.
Pay Only for What You Use: Interest is charged only on the amount you draw.
Revolving Credit: You can draw money, repay it, and draw again as often as needed.
Lower Interest Rates: Though it works much like a credit card, a HELOC’s interest rate is often lower than a credit card interest rate.
Possible Tax Deductions: Depending on your tax laws, the interest may be tax deductible.
There are flexible payment options.

What are a few things to keep in mind about HELOC accounts?

When considering a HELOC, our trained loan professionals will go over the advantages and disadvantages of a HELOC with you and help you decide whether it would be a good fit for your situation. Here are a few things to keep in mind:

A HELOC is a “secure loan”, meaning you are required to put up collateral, and in this case your home is the collateral. So, if you should default on the loan, you are at risk of losing your home.
Having such easy access to cash flow can be tempting, so it is important that you are disciplined when using a HELOC and only use it for necessary purchases and payments.
If your HELOC has a variable rate, your payment might fluctuate based on market conditions.

What could I use a HELOC account for?

There are actually no restrictions on what a Home Equity Line of Credit can be used for. According to our loan officer Tom Werynski, the top five uses of HELOC accounts by Port Richmond Savings Customers are:

Home Improvements
Education Bills
To consolidate personal debt
Auto purchase
Investment purchases

Interested in a HELOC? Here's What to do Next!

If you believe a HELOC may benefit you, contact our loan officers, Tom or Diane, for guidance on whether this financial product is right for you. They can help you with the application process and answer any quetsions you may have.

Give our loan department a call today at 215-634-4621.

Additional Resources and Disclosures

HELOC Disclosure: What You Should Know About Home Equity Lines of Credit
You can also review the Early Disclosure for the Home Equity Line of Credit Application here.
Download the Home Equity Line of Credit application here.
To see a listing of other Lending products, visit our Loan Department.