A HELOC loan is a home equity line of credit loan.
Everyone knows that the story of the goose that laid the golden egg is just a fable, right? Well, maybe not. Over the years you have been paying your house note and your loan balance has been dropping. At the same time, the value of your home has been going up. Hence, your golden egg. That’s right, you can borrow against the equity you have built up over the years to purchase a new car or maybe consolidate your debts. And Uncle Sam may even help you pay for it.
First Pioneers Federal Credit Union offers home equity line of credit loans for people who own their own homes. The way this works is that you take out a loan based on the difference between what your home is worth and what you owe on the mortgage. The rates are based on the prime rate at the end of each quarter. (The prime rate is the rate that the largest companies pay on money that they borrow). You use the money as you see fit. Now, here comes the best part. If you itemize your deductions, you can almost always deduct the interest charges from your income tax.
Let’s use an example. Say you usually maintain a $2000 balance on your charge card. You are paying about 22% in interest or $440/ year. That interest is not tax deductible. Instead, you make a home equity line of credit loan with First Pioneers Federal Credit Union, pay out Sears but maintain the same balance. The current HELOC rate is 6.25%. We have two home equity line of credit options. You can borrow 80% of the value of your house at the prime rate mentioned above. If you need a bit more money, we will loan up to 100% of the value of your home at a rate of prime +1%.
Some people use home equity lines of credit to make major purchases. That is certainly allowed. From a financial standpoint, however, you should consider whether you really want to pay for 10 years on an SUV that will probably not last more than 6 or 7 years.
The whole process is easy to accomplish. Just click on contact us and send us an e-mail. Or, you can give our loan officers or loan manager a call at the First Pioneers Federal Credit Union main number.(337-233-8833)
For information on Home Equity Regulations (Reg Z 226.5 B & Reg 226.16 ) click here.