Home repairs and renovations. Family vacations. Weddings or other celebrations. Emergency expenses. All are reasons you may want to consider applying for a loan. One of the more traditional ways for homeowners to borrow money has been to refinance their homes. The average sale price for a home in Chattanooga has increased almost 40% since we opened our doors in early 2021. If you bought early in that time—or before!—it’s safe to say that you have a fair amount of equity in your home.
Depending on when you purchased, though, you may have locked in an interest rate of 2 or 3 percent; in which case, today’s 7 or 8 percent rates make refinancing a non- starter. A better way to tap into your home's added value as accrued is through a Home Equity Line of Credit—HELOC, for short.
One of the biggest advantages of a HELOC is its flexibility. A traditional loan gives you a lump sum (the amount you applied for) up front, whether you need it all at that moment or not. A HELOC functions more like the line on a credit card, with your home providing the security for the funds. You have a credit limit and can borrow up to that limit at any time during the terms of the loan, but when you repay, you are only paying interest on the amount that you have borrowed.
The ”revolving” nature of the HELOC means that as you repay the loan, you can borrow again if other unexpected needs arise. This access to funds acts as a financial safety net in case of emergencies, providing significant peace of mind.
While some loans are restrictive in how the funds can be used, a HELOC allows you the freedom to use the funds for virtually anything. Maybe your home needs a new roof or you want to add a large deck to entertain friends and family. Perhaps you want to pay off education expenses. You or a loved one may have incurred medical bills outside your normal budget. Or maybe you just want to take that “dream vacation.” Our HELOC product allows you to choose how the funds are used.
There are tax implications for a HELOC, as well. If you use the loan to “buy, build, or substantially improve” the property that secures the loan, you may be able to deduct the interest on up to $100,000 of home equity debt (RockPointBank does not provide tax
advise- you should consult your own tax advisor before engaging in any transaction). RockPointBank typically structures a HELOC for ten years, featuring a competitive, floating rate with interest payable monthly. And we are currently paying the closing costs up to $2,000. If you are more interested in a fixed-rate alternative, we have a solution for that, as well. We also provide easy access to your funds through our online banking portal or the RockPointBank mobile app.
If you need more information or would like to talk to a banker about your best options, Contact Us today!