ADVANTAGES OF A HELOC

As home values continue to rise in South Florida, it might just be time to check out what your home is worth. You may be pleasantly surprised and be able to tackle some big projects you've been putting off. I desperately wanted a new kitchen, and I found out that I now could afford it - it was "on the house"!
I wanted to share some great advice about HELOCs from our friends at Nerd Wallet ^Amy

Whether you need extra cash for home improvements, to consolidate credit-card debt or pay for medical expenses, a home equity line of credit (HELOC) may be your lowest-cost borrowing option this year. 

Besides low interest rates, this mortgage product provides a number of advantages, including potential tax savings, low fees and borrowing flexibility.

What is a HELOC?

A home equity line of credit lets you borrow against the available equity you have in your home, or its fair market value minus whatever is owed on any mortgages tied to it. A HELOC is a form of revolving credit, usually with a lender-set time limit and a variable interest rate on the money borrowed.  

If you’re approved for a HELOC, the maximum you can borrow will be based on the equity in your home.  For example, Tropical Financial Credit Union finances up to 90% of the property value minus the first mortgage. So if your home is valued at $200,000 and you owe $120,000 on the mortgage, your equity is $80,000 and you may be able to borrow as much as $60,000 ($200,000 x 90% = $180,000 - $120,000 = $60,000).

The credit line you receive comes with a draw period, which is the length of time during which you can use the HELOC funds. The period typically lasts from five to 15 years and at Tropical Financial the draw period is ten years. You can use and repay as much of the HELOC as you like during this period.  After that  you will have a repayment period - at Tropical that period is ten years. During that time you can focus on repaying the outstanding balance, thus regaining your equity.

Here are some other potential benefits of HELOCs:

Borrowing flexibility

HELOCs offer a convenient way to make use of the equity you have in your home when you need it, and if you don’t use it, you won’t pay any interest. This distinguishes HELOCS from second mortgages, home equity and personal loans, that provide advances on which repayment often must begin immediately

 Low interest rate

Since you are using your home as collateral,  the initial rate you’ll pay is likely to be significantly lower than a personal loan. However, remember that today’s rates, which remain near historic lows, are unlikely to persist for a decade, and in time you may end up paying a significantly higher rate on what you borrow. Ultimately, the terms for your HELOC will depend on factors that include the amount made available, your history as a borrower, credit score, work history, income and other debts.

 Potential tax break

The interest you pay on money borrowed through a HELOC can be treated like mortgage interest to reduce your federal tax bill. This aspect also distinguishes these products from personal loans and credit card debt, neither of which provide tax benefits. Consult with a tax adviser to determine your specific situation.  

Given these advantages, a HELOC may be your best option if you’re a homeowner in need of some extra cash. 

Steve Nicastro, NerdWallet

#RefiMyRide

Throughout the month of September and even into October we're asking our members to show us selfies of how they roll!  So many people don't know that you can refinance your CAR! We wanted a fun way to let people know how easy it is to refinance a car from another financial institution to Tropical Financial AND earn up to $200* JUST for refinancing with us.  PLUS when you apply for the refinance you're automatically entered into our #RefiMyRide contest to WIN $500**!

When I first moved to Florida I knew about refinancing cars, but was SUPER impressed that not only was I able to save money through a better rate and payment, BUT by doing it I was awarded a thank you from Tropical of $200! So you know what I did, right?  I refinanced my family's second car!  Now of course there are restrictions - like if you've already have your loan with Tropical you're not eligible for the refinance offer - BUT you're definitely eligible for the contest! Just post a picture of yourself with your car on Twitter or Facebook with the hashtag: #RefiMyRide and you're ENTERED! 

Let's see if you're as cool as my awesome Pug Trixie - and SHOW US HOW YOU ROLL!!!

^Amy

Here's the legal stuff:
*Auto refinance does not apply to car loans finan­ced at TFCU or through SFAC. TFCU membership required with $5.00 minimum in savings. $7,000 minimum loan balance required for cash incentive and rate offer. Refinance offer limited to one per vehicle. *$100 cash bonus will be paid for loans between $7,000 and $9,999, $200 cash bonus will be paid for loans $10,000 and above. Cash bonus will be deposited to your TFCU savings or checking account at loan closing. Offer cannot be combined with any other loan offer. Other restrictions may apply. Rate will not be lower than 2.49% APR.
**No purchase necessary. Void where prohibited by law. You must be 18 years or older to enter. Odds of winning determined by the number of entries. Sweepstakes open between September 8 - Oct. 17, 2014. See tropicalfcu.com/refimyride for complete rules and alternate method of entering.