When considering whether to opt for a Home Equity Line of Credit (HELOC) over a cash-out refinance, especially when you have a low interest rate on your current mortgage, there are several advantages to choosing a HELOC:

Preservation of Low Interest Rate on First Mortgage:

A HELOC allows you to tap into your home’s equity without altering the interest rate on your existing mortgage. This is particularly beneficial if your current mortgage has a low interest rate that you want to maintain.

Flexibility in Accessing Funds:

HELOCs provide a flexible way to access cash as needed, which can be used for various purposes such as debt consolidation, home improvements, or covering tuition fees. This flexibility can be more advantageous compared to a lump sum received from a cash-out refinance.

Standalone and Piggyback Options:

5280 Financial Group, Inc. offers both standalone HELOCs and piggyback HELOCs. A standalone HELOC is independent of who originated the loan, providing a simple way for current homeowners to access their home’s equity. A piggyback HELOC allows qualified conventional borrowers to secure a new mortgage while simultaneously opening a home equity line of credit, which can be beneficial for those with less available for a down payment.

Competitive Loan Amounts:

Both standalone and piggyback HELOCs offer loan amounts up to $500,000, which can be competitive and help you win against big banks and retail lenders.

These advantages make HELOCs a compelling option for borrowers who want to maintain their low interest rate on their first mortgage while still accessing the equity in their home.