Home Equity Lines of Credit Explained | How a HELOC Works, Pros and Cons

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In this video:
00:00 - Introduction: what’s in this video?
00:27 - What is a HELOC?
01:09 - How is it different from a cash out refinance?
01:22 - Why a HELOC can be better
01:57 - What’s a blended interest rate?
02:29 - Why a blended rate is important
02:53 - A blended rate example
03:32 - Blended rate - not a one-time thing!
04:22 - How would I use a HELOC?
04:53 - HELOC as an emergency reserve
05:36 - Words of caution
06:52 - HELOC programs vary - why?
08:17 - How much can you borrow?
09:07 - Setting up a HELOC
09:49 - How does a line of credit work?
10:26 - Draw period
10:52 - Minimum monthly payment
12:06 - What happens when the draw period ends?
12:55 - Drawbacks to a HELOC
13:26 - What is the Prime Rate?
15:07 - Fixed rate Home Equity Loan vs HELOC
16:07 - How to shop for a HELOC
16:41 - 7 question HELOC shopping list

#HELOC #HELOCexplained #homeequitylineofcredit #helocvsrefinance

Julee Felsman, SVP of Mortgage Lending NMLS 120831
Guaranteed Rate, Inc.; NMLS #2611. Equal Housing Lender.

Branch address: 1300 SE Stark St Ste 111, Portland, OR 97214
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Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Guaranteed Rate for current rates and for more information. By refinancing, you may pay more in costs and interest over the extended term. Sample rate provided for illustration purposes only and is not intended to provide mortgage or other financial advice specific to the circumstances of any individual and should not be relied upon in that regard. Guaranteed Rate, Inc. cannot predict where rates will be in the future.

All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Guaranteed Rate, Inc. does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Guaranteed Rate, Inc. Guaranteed Rate, Inc. its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.

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[dr.Morgann]

A guy asked if he should get a HELOC for a home renovation. I said, “I wouldn’t, ” and suggested saving instead. He didn’t reply. Many homeowners are surprised by the idea of saving money for projects. I chose to save and invest in the stock market, which has helped me build long-term financial stability without taking on more debt.

[Mike-qonm]

I don't know why you don't have big ol' K after your subscriber amount. This was by far the best video on how helocs work out of the dozens I've watched. Def earned a sub here. Looking forward to watching the rest of your videos!

[JoeH-kqby]

I have no idea how you manage to deliver this good information without even stuttering or delaying info. Impressive.

[joannpeistrup]

This is the absolute best description of how HELOCs work. Thank you so much!

[josephkaminskid.o.personal]

Hey Julee, I completely agree with Mike below. You should have thousands of views. Best video explanation on topic I've seen. Well thought out, organized, and presented. Not to mention professional quality and pleasant delivery. Others mention the pros but leave out the cons and other important details that you covered. The "Questions to Ask" at the end is brilliant and greatly appreciated. I immediately subscribed and will spread the word regarding your site. It seems like a great vehicle to have liquidity and capital available to make your money/equity work for you rather than a bank. Thanks for this awesome video!!!

[RobinGKT]

New Subscriber! I’m so happy I found your channel. This information is exactly what I’m looking for in the very near future. Thank you so much for the information 😊Robin

[awholenewloan]

I am so glad I found you! Your delivery is EXCEPTIONAL. So easy to listen to and wonderfully streamlined. Thank you for your commitment to educate!

[FallujahMarine]

Very informative and thanks for taking the time to explain!

[jjohnson]

This was such a great breakdown of a HELOC and HELoan! Thank you!

[Jambuw]

This was by far the best explanation of a HELOC I have viewed. You covered all of the key factors associated with a HELOC. Thank you for you clear and concise explanation.

[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.

[rafaelgomez]

🎉 Great valuable info, tips and the BONUS JARGON / QUEDTIONS to banker towards the end...love it !!!

[JayGarces]

This was a great explanation of how HELOCs work! I always wondered how it worked and what the risks were. Thanks for taking the time to do this and great production value!

[DannyBagley-io]

The most explanation I have ever found. Thank you so much.

[Romenet]

Thank you for this info. It was very informative. I just got my Heloc. It is fixed at 5.15 but payback is 100 per 10000 borrowed and you have to payback immediately as soon as you draw. Which I am fine with because I want to pay down debt of higher interest credit cards. My plan is keep my heloc balance as low as possible while still paying off my debt in chunks.

[pj-light-glass]

My trusted financial gal got a Heloc arranged for me. Going to use it primarily for three remaining repairs for my condo. I'm lucky that I am able to knock out all repairs in "wall out" situations.
This info that you're sharing is invaluable. The fees such as an early termination fee are of particular concern.
I haven't signed anything yet, probably will today so I can wrap up the remaining work at the condo.
But not signing anything until I ask some pertinent questions! Thank you very much Julee Felsman!

[awesomebosssoccer]

This was a master class! I went back and took notes! So good!

[gmscolh]

Your explanation about a “HELOC” loan is very informative and makes a lot of sense. Thank-you!…..I will be starting a HELOC real soon.😊

[monikahuddleston]

I am just watching your video on 5/1/24. Thank you for much for speaking plainly! Thank you also for presenting the pros and cons of each; the questions to ask are a bonus as well.

[sheroken]

@julee! Great video and content. I had little to no understanding of what HELOC was. I am actually shopping around for Some Home Equity form of loan and I was undecided on whether to go for a Home Equity Loan or a HELOC. Watching your video definitely brought me clarity. Thanks, you definitely earned a new subscriber.