As property values in Hawaii grow, equity in your home is also available. Pearl Hawaii’s HELOC can help you cover larger expenses. Of course, it doesn’t make sense to refinance your existing mortgage unless you have a high rate. If you have a lower interest rate on your existing home loan, tapping into the existing equity with a Home Equity Line of Credit (HELOC) may make the most sense to help you cover larger expenses.
Pearl Hawaii’s HELOC is a line of credit. It is very similar to how a credit card which allows you to borrow against a limit in increments and as many times as needed.
For example, your home is valued at $1 million. Your existing mortgage is $500,000. You’re approved for a HELOC with an 80% LTV (loan-to-value) of your home’s equity. You can be approved for a HELOC with a limit of up to $300,000. The amount you receive is dependent on your creditworthiness, which is the extent to which a person is considered suitable to receive monetary credit based on their credit score.
$1,000,000 (estimated home value) x 80% (Loan-to-Value or LTV) = $800,000
$800,000 (80% LTV of your estimated home value) – $500,000 (existing mortgage balance) = $300,000 (you possible line-of-credit)
Most HELOCs have variable interest rates. Variable means the rate will go up or down with the market. As a result, variable rates leave you vulnerable to rising interest rates so be sure to take this into account. Sometimes you can catch a special promotional fixed rate or opt for a fixed rate option. A fixed rate is when the Annual Percentage Rate (APR) does not change for a specific period of time.
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Access To Your Home’s Equity, When You Need It
A Home Equity Line of Credit lets you tap into your home equity as needed. You can pay it down and re-borrow against it as you see fit. A line-of-credit works well if you want a safeguard to fund large, unexpected, or ongoing expenses. You can reduce interest costs by paying down the balance between draws.
Common Uses of a HELOC
Home Improvement Projects
Pearl Hawaii’s HELOC is perfect for financing large and small home improvement projects, especially if the projects are happening in phases. Unlike other loans, a HELOC comes with a low-interest rate that can save you thousands in interest over the life of the loan. If you need to renovate your kitchen, want a swimming pool, or fix a housing mishap, a HELOC will help you get this accomplished.
Educational Fees & Tuition
Using a HELOC to pay educational expenses is a great way to avoid the need for private or federal student loans. The flexibility of a HELOC lets you borrow what you need, pay down the balance, then re-borrow funds again. Additionally, you only pay interest on what you borrow.
Medical Expenses
When you’re struggling to determine how to pay for medical bills, your home’s equity may be able to help. A HELOC can help you cover the cost of a lengthy hospital stay, expensive procedure, or much-needed treatment.
How much equity do I need in my home for Pearl Hawaii’s HELOC?
The amount of equity you currently have in your home will determine your Home Equity Line of Credit (HELOC) limit. Consult with a Pearl Hawaii loan expert to determine your estimated credit limit amount.
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