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!

VIDEO RECOMMENDATION - How to Pay Off Your Mortgage within 5 to 7 years:    • How to pay off a 30 year home mortgag...  

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.

Though interest rates are often higher on a HELOC than a traditional mortgage, there ARE ways to save money on interest and time by using a HELOC to pay off your mortgage with an unique strategy called the Debt Free Acceleration Strategy. You can watch the FULL explanation video of that strategy here:    • How to pay off a 30 year home mortgag...  

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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