The Home Equity Line of Credit

What is a HELOC? A Simple Guide to Home Equity Lines of Credit

Thinking about updating your home, paying for education, or consolidating higher-interest debt? A Home Equity Line of Credit- better known as a HELOC might be one option to consider which allows you to access funds using the equity you've built in your home. This guide breaks down how HELOCs work, what they are commonly used for, and what to keep in mind before applying.

So... What Exactly is a HELOC?

A Home Equity Line of Credit (HELOC) allows you to borrow against the equity in your home. Your equity is simply the difference between your home's value and what you still owe on your mortgage.

• You can draw funds as needed during the draw period.
• You repay what you borrow, and available credit replenishes as you repay.
• Interest is charged only on the amount you borrow.

Most HELOCs have variable interest rates, which means your rate- and your payment- can change over time, based on market conditions.

HELOC vs Home Equity Loan: What's the Difference?

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 during the draw period. Repayment varies based on usage and rate. Typically a variable rate.
• Home Equity Loan: Receive a lump sum upfront, and generally repaid in fixed amounts over a set period of time. Typically a fixed rate.
• Both products use your home as collateral, and both require credit approval.

Why Do People Use HELOCs?

• Home renovation projects
• Education or training costs
• Consolidating higher-interest debt
• Vehicle purchases
• Certain investment-related expenses

Actual permitted uses may vary based on lender policies and applicable regulations.

Potential Advantages of a HELOC

A HELOC may offer:

• Flexible Access to Funds during the draw period.
• Interest charged on only the amount borrowed.
• Revolving Credit, allowing multiple draws and repayments.
• Rates may be lower than unsecured credit products, depending on market conditions.
• Possible Tax Deductions: Depending on your tax laws, the interest may be tax deductible. Consult with a tax professional.

Important Things to Keep in Mind

Before applying for a HELOC, it's important to understand the responsibilites and risks:

• A HELOC is secured by your home. Failure to meet repayment obligations could result in the loss of your home.
• Variable interest rates mean your payment amount may change.
• Access to revolving credit requires careful budgeting and responsible use.
• Fees, terms, and conditions vary by lender.

Thinking About a HELOC? Here's How to Get Started

If you're exploring whether a HELOC aligns with your financial needs, our loan officers can walk you through the details of our program, explain terms and requirements, and answer general questions about the application process.

You can reach our loan department 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.

• Read more about HELOCs and Home Equity Loans at Port Richmond Savings.

• To see a listing of other Lending products, visit our Loan Department.

Standard Disclaimers

• All loads are subject to credit approval and collateral requirements.
• Terms, conditions, and rates are subject to change.
• This material is for informational purposes only and should not be considered financial or tax advice.
• Consult a qualified tax professional regarding the deductibility of interest.