Our Staff’s Favorite Picks: Linda Loves HELOCs
We know that Fox is the organization you turn to when you need some advice or a recommendation on a financial product or best practice. We also know that the face of Fox is different for all of you. You all visit different branches and have different favorite tellers and lenders that you work with and trust. That’s why we’ve enlisted our staff’s help in showcasing some of our products and services with you. We would like you to hear about the best of what Fox has to offer from the people you trust the most! Each month, we’ll be featuring the favorite product, service, or financial tip from one of our Fox staff! This month, we had the pleasure of talking with Linda J., a member relationship officer from our Calumet location, about home equity lines of credit (HELOCs). She told us why she thinks (almost) everyone should have one and just what makes them so awesome.
So, we hear you really like HELOCs?
I do. I think it’s important for our members to have them. We all know that here in Wisconsin it gets very cold. If your furnace goes out, you’ve got to have some way to back yourself up. Some way to be able to pay for it to be fixed. It’s not like “Oh well, it’s warm out so I don’t really have to worry about this for now.” You kind of have to have that! Everyone in Wisconsin should have one. It’s just a backup. It’s a help-you-sleep-at-night thing. You know that if something major happened, you’ve got backup with that line of credit.
Do you think there is anyone who shouldn’t have one?
I think there are very few who shouldn’t. The people who can’t handle credit – I don’t recommend them getting one. Just because it’s another way to put yourself behind the eight ball. You don’t want to give someone who will run their credit cards up a line of credit on their home. It’s just way too easy.
Then it becomes another way to pay off your credit cards?
…and just build them back up again, exactly. I would not use them for debt consolidation necessarily. One-offs are okay. We’ve had a tough year with COVID and everybody kind of racked up some credit card debt. If in the past, they hadn’t racked up debt then I would just look at it as okay. We’re just getting them out of the woods. We all know that credit card debt sits out there at a higher interest rate. It’s harder to pay that off with that higher interest rate, you’re paying a lot towards interest. Having [an] equity line for that situation where things happen during COVID and “we had to do it.” That’s not so bad. [is] not the same as “This happens every three years and then we have to bail ourselves out.” That’s not the purpose of [HELOCs].
Is a HELOC another mortgage on my home?
It actually is. It’s considered a second mortgage on your home. Mortgages stack, so your home loan is going to be your first mortgage and then your second mortgage would be like your home equity loan or line of credit – whichever you prefer.
Because it’s a second mortgage, you’ve got the possibility of a tax break. Some people will be able to deduct the interest on their taxes. We can’t say that you’d be able to for sure, that’s a question for your tax advisor.
How different is applying for a second mortgage than applying for your first?
It’s a little less involved. Most of the time [you] can use income from, say, a tax bill. Often, they can check the value of the home from your property tax bill rather than having to go through an appraisal.
Where does someone need to be with their current home loan in order to start thinking about a HELOC?
It depends on how much of a line you would need. Even a small line is, I guess, peace of mind for our members. Even if you do a $5,000 line, you can get a lot of stuff done for $5,000. Probably not a full furnace system, but you could maybe repair what you’ve got. So, I always say that even a small line is good. You’ll go out and get a $1,000 credit card, right? Why not a $5,000 line of credit on your house?
With better interest, right?
Exactly! Yes, much better interest and if something goes wrong on your house, you’re using that line to invest back into your home.
So, if this got you thinking that maybe you’re in need of a backup plan for your furnace or any other rattling appliance you happen to have, give us a call or stop in to talk to one of our lenders. We’ll be happy to answer any questions that you might have about the process or even get you started on an application! We’d much rather you came to see us before the repairmen have to come and see you!
Still curious? Learn more about HELOCs. Can’t wait to get started?