Unlike an installment loan, you don't receive the entire amount upfront. Instead, your HELOC is there if and when you need to use it. You can transfer money from your HELOC's available balance to your checking account to use as cash. You will also receive a checkbook linked to your HELOC account if you want to write a check against the balance.
Interest accrues daily based on the current balance each day. Term lengths vary but most HELOCs have an initial draw period, during which you can use your HELOC balance and make payments as often as you like. Once the draw period comes to an end, any remaining balance is converted to an installment loan with a fixed term length for repayment.
How much can you borrow on a HELOC?
The answer depends on multiple factors such as your credit score and other debts. The two most important factors are the current market value of your home and the balance on your primary mortgage. You need to have a certain amount of equity in your home to borrow against. Generally, lenders limit HELOCs to 85 percent of the appraised value of your home minus your existing mortgage balance.
Let's say your house appraises for $375,000, which is about the current median home value in Prince William County. If you owe $275,000 on your first mortgage, you have $100,000 in equity. However, based on the 85 percent rule, you'd probably be limited to a $40,000 credit line. This enables you to use some of your equity to pay for a home renovation or other large expense, while protecting you from falling "under water" (when you owe more than your home's market value) on your mortgage.
How long does it take to get a HELOC?
The application process for a home equity credit line usually takes about a month from start to finish. If your primary mortgage is with TFB and you also come to us for a HELOC, the process may go faster because we will already have some information about the property and your mortgage loan. However, we will still need to do a current appraisal of your home's value and go through the underwriting process of reviewing your financial documentation. TFB's mortgage lenders will work with you to get the paperwork together and process your HELOC as quickly as possible.
Apply for a HELOC from TFB today!
To start the HELOC application process, contact a local mortgage lender or apply online. You can also visit your nearest TFB branch in Manassas, Haymarket, Bristow, Gainesville, Warrenton, The Plains, New Baltimore, Catlett, and Bealeton. Our friendly mortgage lending team offers personalized service and local expertise in the Northern Virginia real estate market. And as a community bank, all of our decisions are made locally in Prince William and Fauquier counties.
Not sure if a HELOC is right for you? Browse our home loans & financing page for a full menu of home loan options. Need the funds faster? Check out TFB's personal loans. With our Minute Lender service, you can apply online and receive a decision almost instantly!