Flexible access to equity
Home Equity Line of Credit
A revolving line of credit secured by your home’s equity, with fixed or variable rate options.
A home equity line of credit (HELOC) lets you borrow against the equity you’ve built in your home, much like a credit card with a much larger limit. You draw what you need, when you need it, up to your approved limit, and pay interest only on what you use. Your first mortgage stays exactly as it is. That matters if you already have a rate you don’t want to give up.
Common ways Colorado homeowners use a HELOC
- Kitchen, basement and other renovations
- Paying off higher-interest credit cards or loans
- College tuition or other large planned expenses
- A cushion for emergencies, with nothing owed until you use it
- A down payment on a second home or rental property
How a HELOC works
A HELOC has two phases:
- Draw period, often around 10 years. You can borrow, repay and borrow again. Many HELOCs allow interest-only payments during this time.
- Repayment period. Borrowing stops, and you pay back the balance with principal and interest.
Most HELOCs have a variable rate that moves with the prime rate, so your payment can go up or down. Some programs let you lock part of your balance at a fixed rate. We’ll walk you through the options so you can choose what fits how you plan to use the money.
How much you may be able to borrow
Lenders look at your home’s value, what you still owe, your credit and your income. Many allow a total of 80% to 90% of the home’s value across your first mortgage and the HELOC. For example, on a $600,000 home with a $350,000 mortgage, 85% of the value is $510,000, leaving up to $160,000 of potential credit. Try our Home Equity Calculator to estimate yours.
Things to weigh
Your home secures the line, so it’s important to borrow for things that make sense for your budget. With a variable rate, payments can rise. If you’d rather have one fixed payment and a lump sum, a home equity loan may be a better fit.
Common questions
HELOC or cash-out refinance?
If your current mortgage rate is lower than today’s rates, a HELOC usually lets you keep it. A cash-out refinance replaces your whole loan, and can make more sense when rates have come down. We’ll compare both.
Is HELOC interest tax-deductible?
Sometimes, depending on how the money is used. Please check with your tax professional.
Can I get a HELOC on a second home or rental?
Some lenders allow it, with different limits. Ask us about your property.
Curious how much equity you could access? Call us at 303-931-3239, or get prequalified online.