Working with a HELOC payment calculator

You’ve spent years dutifully paying your mortgage, and now you’re ready to tap into the equity investment. Using a HELOC payment calculator will help you determine how much loan you can afford and what type of loan would work best for your individual needs. Let’s take a moment to review some home equity basics.

Home equity refers to the difference between the property’s fair market value and the amount that is owed on the mortgage. If you’re working with a HELOC payment calculator, it’s helpful to first determine how much equity you have invested in your home. Many homeowners borrow against their equity in order to fund home renovation projects, consolidate debt, or cover the cost of a college education. Whatever the need, a HELOC payment calculator helps you compute how much you’ll pay monthly for your new loan.

The chief difference between a HELOC and the other type of home equity loan (a second mortgage) is that the borrower draws from their HELOC account as need arises. Similar to a credit card, the interest rate is usually variable, and tied to the prime lending rate. A second mortgage is paid in a single lump sum with fixed rate and payments. As the HELOC payment calculator indicates, payments on your HELOC will vary according to the amount borrowed and the current rate on the loan.

For many, a HELOC provides the freedom and flexibility they need from a mortgage loan. For example, if your home improvements will take place over a period of months, you may not need the full amount of the loan upfront. You could withdraw a portion to pay for the contractor or supplies, and withdraw more later, when the project is completed. You will only make payments on the balance withdrawn, not the full amount of the line of credit.

How does a HELOC payment calculator work? Simple: you enter the total amount of the loan, then specify an interest rate and the loan terms. All the number-crunching is done for you, so you’ll have an accurate picture of the financial impact your new loan would have on your budget.

Using a HELOC payment calculator is an efficient way to find your new home loan that eliminates the guesswork out of the process. Another benefit you can derive from obtaining a HELOC is the potential tax boom. In most cases, you’ll be able to deduct the interest paid on your loan, at tax time.

Before applying for a loan, be sure to check out the online tools and resources at HomeLoanCenter.com. Use the HELOC payment calculator to compute how the new loan could affect your monthly cash flow, then choose the loan that’s right for you.

Need lower monthly payments?  Extra cash?  A fixed mortgage rate?  Refinance now! Home Loan Center can help!