What is a HELOC? For owners, it turns equity into spending power | Sponsored content
They used it to pay for tuition or medical bills, to cover a major purchase, or just to set up a financial safety net. And over the past year, when many hesitated to travel, many people in central Illinois and elsewhere have used the equity in their homes to turn their own residences into oases of serenity and pleasure.
âIt’s amazing the number of homeowners who put up pools, spas, things where they can have fun at home instead of maybe going on a trip,â says Jim Nichols, retail manager at Prospect Bank. âThis is where we see a lot of home equity used, a lot of home renovations. It’s amazing how many people are putting money back into their homes because they’ve spent so much time there over the past year.
Prospect Bank has seen it all since it was founded in Edgar County in 1873, striving then as now to help members of its community reap the benefits of homeownership. And one of those benefits is known as HELOC – short for home equity line of credit– which can offer immense purchasing potential for an incalculable number of uses, or simply put in place an accessible financial guarantee in case of emergency.
âIt gives people considerable purchasing power. And I think it gives people the peace of mind knowing they have it if something happens, âsays Nichols, who has worked in banking for over 30 years. âLike a medical expense – people have unforeseen medical expenses from time to time, and we all know how expensive it can be. So for me this can be a product of peace of mind. “
Flexible uses, higher prices
A HELOC allows people to tap into the financial equity in their home and use that money for just about anything. If a client has $ 10,000 of equity in their home, for example, they can take out a HELOC for that amount. They can use everything at once, bit by bit, or stick to it – since customers only have to pay back what they use, a HELOC can be as flexible as the owner needs.
But that’s not the only advantage of a HELOC Prospect Bank. For the first seven years, customers can make minimum monthly payments covering interest only, although they are also asked to make payments in principle. And the interest rate is far higher than that on a credit card, which averages around 15%. Prospect Bank’s HELOCs offer variable rates based on a prime rate at an all-time high of 3.25%, which allows Prospect to offer starting rates as low as 3.75% to eligible clients.
And throughout the month of June, Prospect Bank hosts a special issue on HELOCs: a 3% rate fixed for three years, with waived closing costs – which means no fees for valuation, research for flooding, stock search and other part of the process. No wonder some borrowers combine a HELOC with their first mortgage and refinance the whole package to get a better rate.
âThis allows us to determine what the borrower’s needs are and what they want to accomplish,â says Nichols. âAnd those needs can be just about anything. You can have someone with a kid going to college, and the parents have to find money to fund college expenses. We see that a lot of people use it for this; they draw from it periodically according to their needs for tuition, books or accommodation costs. We’ve seen people buy cars with it. People can use their equity for big purchases like this, big vacations, or home renovations. “
Direct answers, no surprises
As a community bank, Prospect Bank prides itself on knowing its customers and their needs. Borrowers are not just numbers on a piece of paper, but neighbors that Prospect employees might meet at the hardware store. The homes from which they derive equity are not vague residences, but in many cases street addresses that loan associates are familiar with.
For clients, all of this cultivates a sense of confidence that they are getting a financial product that is right for them – whether it’s a HELOC, mortgage, or any other type of loan.
âI always take great pride in my ability to communicate to our clients what to expect in the process and point them out to them what is most appropriate for them,â says Nichols. âAnd I really believe our lending associates, our loan officers, are doing the same. And I think that’s the most important thing we can offer our clients: clear answers, clear communication, no surprises during the process. “
Want to find out what a HELOC Prospect Bank can do for you? Visit one of its nine locations in central Illinois, including the main branch at 177 West Wood St. in Paris, call (877) 465-4154 or visit BankProspect.com for more information.