HELOC Explained: What is a HELOC?

HELOC Explained: What is a Home Equity Line of Credit? (Abbreviated to HELOC or H.E.L.O.C.) "pronounced Hee-lock" If you're wondering what is a HELOC? Well - In this video, let's break down exactly what is a HELOC and how it's different from your traditional mortgage! Here it is, HELOC Explained Enjoy!

HELOC is an abbreviated term for Home Equity Line of Credit. A HELOC collateralize your home equity to a line of credit for you to be able to draw the money out and repay over and over again. Very similar to a credit card, your HELOC is a revolving line of credit. Imagine a tank full of water stored inside but you can't get into it. It's completed. What a HELOC is to that water tank is kind alike installing a faucet so you can get access to the water. But unlike this water tank-faucet example, you can actually put the "water" back into the water tank in a HELOC. Meaning, you can pay back what you've drawn and re-use any principal portion of your payment.

Home Equity (in laymen's explanation) is the fair market value (FMV) of your home minus any loans or liens you owe on your property such as a mortgage. So for example, if your home is worth $200,000 and you owe $100,000 on a mortgage, you have $100,000 in equity that you can get access through different means such as selling your home, getting a Home Equity Loan, or a HELOC.

Line of Credit is a credit instrument to which you can borrow the money, payback, and re-use it again as long as the line of credit stays open and active. In most cases, Lines of Credit have credit limits and you're limited to a specific amount that you can draw. In the case of a HELOC, your credit limit is often determined by your Home Equity and the Loan-To-Value that a bank establishes. Loan-To-Value (LTV) is a percentage of how much debt you have against an asset. Going back to the example of $200,000 home value. A 90% LTV loan means that you can borrow up to 90% of the $200,000 home value. So if you already have a $100,000 mortgage and you're looking to get a 90% LTV HELOC, you can only access an additional credit limit of $80,000. ($100,000 mortgage + $80,000 HELOC = $180,000) The LTV percentage may be set by the banks and different banks may offer varying percentage for the LTV required.

If you're shopping for HELOC Interest Rates or HELOC Rates, get at least 3 bank offers before moving forward (Esecpially if you're looking to Replace Your Mortgage or implementing the Velocity Bank Strategy/Debt Free Accelerator Strategy) Hope this video gave you a good enough content to have the HELOC Explained and answered your question 'What is a HELOC'.

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The Kwak Brothers are millennial real estate investors who have acquired over 82 Units of Rental Units and have raised over $20,000,000 of capital for their real estate deals. They are based out of the Chicago-land area and they are dedicated to helping hard-working people become financially free real estate investor! They specialize in owner financing acquisition and raising capital. They are the creator of the FORCE Strategy (Find the deal, Owner Finance It, Raise the Capital, Cashflow It, and Expand your Financial Freedom)

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---DISCLAIMER--- The suggestions, advice, and/or opinions that are given by Sam Kwak (The Kwak Brothers) are simply opinions. There are no guarantees of set outcomes. Listeners, guests, and attendees are advised to always consult with attorneys, accountants, and other licensed professionals when doing a real estate investment transaction. Listeners, guests, and attendees are to hold Sam Kwak, Novo Elite, Inc. and the Kwak Brothers brand harmless from any liabilities and claims. Not all deals will guarantee any profit or benefits. Listeners, guests, and attendees are to view and listen to all materials and contents furnished by the Kwak Brothers as a perspective based upon experience.

[TheKwakBrothers]

Do you have a question about a HELOC? Anything that we missed??? Comment down below!

[alexaclaire]

Does HELOC change your mortgage payment at all? What do the payments look like for a HELOC? Why would someone prefer this to a Cash Out Refi or maybe a standard construction loan?? Thanks for your help!

[jeroldstokes]

THANKS. Just what I needed to watch. My wife and I got a 400k HELOC from our 780k primary home which we are still paying a mortgage for. I want to only use 200k for this new duplex down payment. I realized that the secret to making millions is making better investments and staying out of debt.
I'm grateful to GOD for the internet space, we were able to join the credit repair program, we payed up our debt and now we are back to being the administrators of our farming business and our own properties, as well as small pensions. I am almost 56, my wife is 52. We have started saving for retirement from the farm and maybe live off rental income, I would really appreciate it if you would do a video on how to earn using Airbnb and retire comfortably.

[mrhudah]

Great Video man! Well explained! Keep going👍🏾

[dawnsmart]

Thank you! I appreciate you, you broke it down!

[choosetoshine]

Exceptional content and well delivered! 😊

[skabettispaghetti]

For me, there is something about a video that so much better than just researching an article. Thank you so much for your clear explanation. I'm wondering about the advantages of using HELOC over paying cash for a basement remodel. TX.

[lizagrace]

Love you guys! thanks so much for very informative you tube channel.

[jeffreyashley]

Super helpful thank you for the great advice!

[guadalupegonzalez-rodrigue]

You are so intelligent. Thank you so much for sharing

[kemetickuts]

Great vid. Gave me exactly what I was looking for

[brycendemoss]

As a appraiser, this helped, a lot of appraisals I'm doing now for banks have been heloc loans..

[natalyk]

THanks for info! A question, since interest is compounded daily, does that interest become part of the principal the next day, or does it become part of principal next closing statement? Are there statement periods? Also can you please make video on what questions to ask and what to look out for when getting HELOC (i.e mandatory minimum withdrawal upon opening, annual dues, any other tricks bankers have). Thanks

[ChrisKaakau]

Hi Sam! Do you have any recommendations on national banks that do HELOC good leasehold properties? Also any recommendations on national banks for owner occupant and investment properties? Thank you!

[daliasaha]

do you have a good research for comparing HELOCs?

[esaugomez]

What is the best option if the house is already paid for? Heloc or refinance.

[dylancruz]

So question that I can find the answer too. When the interest rate is variable is the monthly payment also variable ?? Or with the monthly stay the same and the amount that goes to principle vary??

[alexaclaire]

We want to buy our 2nd property & make our 1st propery an investment property. Would a HELOC be a good choice for us to build a 2nd property on our land? We have a TON of equity in our house

[mmaldonado]

How long does one have to wait to do this?

[juanjon]

Would it be smart to pay off my debts I have credit cards and loans 35k total about 9% apr average