What does HELOC mean?
A HELOC means Home Equity Line Of Credit and it’s a revolving credit line that converts your home equity into funds you can withdraw at any time during your draw period.

While your balance starts at zero with a traditional HELOC, AFCU gives you the option to draw $5,000.00 at the time of funding, as your first draw and allows you to draw your entire loan amount if you need it, there is no draw limit during the draw period. A home equity line of credit can act either as a first or second mortgage, depending on if you own your home outright or not. In either scenario, a HELOC will use your property as collateral.

How does a HELOC work?
HELOC loans are based on our home’s available equity. Home equity tells you how much of your home’s total value belongs to you vs. to the lender. You build equity as you continue to make mortgage payments each month. You can also gain equity if your property value goes up due to housing market changes or improvements you can make.

You can open a line of credit to tap into the equity with a HELOC. With a traditional home equity line of credit, you can withdraw funds whenever you want during the draw period. When you use your funds, your available balance goes down. However, as you make payments on your outstanding balance, you can replenish your available funds.

How long will my HELOC last? 
Term Length: 30 years
Draw Period: 10 years
Repayment Period: 20 years

How do I repay my HELOC loan?
You will make monthly payments, as you would with any type of mortgage, until the loan has been repaid in full. AFCU 30-year HELOC allows you to make monthly payments during your 10-year draw period and runs through your repayment period of 20 years. Your payments will need to cover both your outstanding balance and any interest that has accumulated.

How much money can I borrow with a HELOC loan?
Your HELOC loan amount will be largely based on your home equity. Keep in mind that lenders including AFCU are unlikely to extend a line of credit that matches your full amount of equity. AFCU will check home values, income, debt, and credit report to determine the amount of money you can borrow. AFCU will also check for any risk factors in your financial history that might suggest a lower HELOC amount would be better. Some of these risk factors include credit score, combined loan to value (CLTV) ratio, and debt to income (DTI) ratio.

How much equity do I have in my home?
AFCU doesn’t required in-person appraisal. An automated model will determine your home’s value. Not only does this speed up the approval process, but it eliminates the hassle of having someone come to your home and pay the high appraisal fee.

How can I use my HELOC funds?
Once your line of credit is open, you are free to spend the money in a variety of ways, some of the most common uses for a HELOC include Consolidating high-interest debt like credit cards, covering major expenses like home renovations, paying for recurring costs like college tuition, and more.

How do HELOC rates work?
AFCU HELOCs use variable interest rates rather than fixed rates. Variable interest rates readjust at regular intervals to reflect changes in the economic and lending environments. Most notably, variable rates are closely tied to the prevailing index rate - also known as the Prime Rate.

When using AFCU HELOC, it’s important to realize that the rate you are offered is the introductory period rate. Your rate can and will routinely fluctuate. AFCU HELOC rates can be adjusted as once a month. This means the amount of interest you owe could change multiple times throughout the life of your home equity line of credit.

AFCU changes their HELOC rates in April and October.

How do I qualify for a HELOC loan?
When reviewing HELOC applications, AFCU underwriting team evaluates a few factors:

• Credit Score as low as 580
• Maximum Debt to Income Ratio (DTI): 45%
• Maximum Combined Loan to Value Ratio (CLTV): 80%
• Property Types: Single Family Residence (SFR), Townhomes and Condos,
  Planned Unit Development (PUD).

Does a HELOC make sense for me?
AFCU’s HELOC product makes sense if you need to gain more financial flexibility in a short period of time. Our fast time-to fund window means you could have access to a new line of credit in as little as five days. For more information, please call (800) 795-2325 option 7.

Getting a home equity line of credit through AFCU is a good fit for people who want to tap into a new source of funds as quickly as possible. This type of HELOC makes sense if you need more financial flexibility to pay for a mid-to-large expense on relatively short notice – think home renovations, debt consolidation and college tuition.

Our knowledgeable real estate specialists are here to assist you. To speak with an AFCU team member, please call (800) 795-2325 option 7. We’re ready to help you with all your home loan needs!