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Home Equity Line of Credit (HELOC) Strategy: Tips for Maximizing Your Funds


May 7, 2023



If you're a homeowner with equity in your property, you may have considered taking out a home equity line of credit (HELOC) to access those funds. A HELOC allows you to borrow against the value of your home and use the money for a variety of purposes, such as home improvements, debt consolidation, or unexpected expenses. However, like any financial product, it's essential to have a solid strategy in place to make the most of your HELOC. In this article, we'll explore some tips for optimizing your HELOC strategy and maximizing your funds.

1. Determine Your Needs and Goals


The first step in developing a successful HELOC strategy is to determine your needs and goals. Consider why you're taking out the HELOC and how much money you need. Do you need funds for a specific project, or do you want to have access to a line of credit for unexpected expenses? Understanding your needs and goals will help you determine how much to borrow and how to use your funds most effectively.

2. Understand the HELOC Terms and Fees


Before taking out a HELOC, make sure you understand the terms of the agreement. Familiarize yourself with the interest rate, repayment terms, and any fees associated with the loan. You'll also want to know the draw period (the time during which you can borrow against the line of credit) and the repayment period. Understanding the HELOC's terms and fees will help you make informed decisions about how to use your funds and when to pay them back.

3. Use Your HELOC Strategically


Once you have a HELOC, use it strategically. Avoid using it for frivolous purchases or overspending. Instead, consider using your HELOC to consolidate high-interest debt or fund home improvements that will increase the value of your property. By using your funds strategically, you can minimize the amount of interest you'll pay over time and potentially increase the value of your property.

4. Monitor Interest Rates


HELOC interest rates are typically variable, meaning they can fluctuate over time. Keep an eye on interest rates and consider refinancing your HELOC if rates rise significantly. Refinancing can help you lock in a lower rate and potentially save you money over the life of your loan.

5. Make Payments on Time


As with any loan, it's essential to make your HELOC payments on time. Late payments can damage your credit score and result in fees and penalties. Set up automatic payments or reminders to ensure that you never miss a payment

6. Have an Exit Strategy


Finally, have an exit strategy in place for your HELOC. While a HELOC can be a valuable financial tool, it's essential to pay off your loan before you retire or sell your property. Make a plan to pay off your HELOC over time and avoid using it as a long-term solution for your financial needs.

In conclusion, a HELOC can be an excellent financial tool for homeowners with equity in their property. By developing a solid strategy and using your funds strategically, you can make the most of your HELOC and achieve your financial goals.

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Hitch, Inc. 23833672158 NW Toussaint Drive. Bend, Oregon 97703

1. Qualified applicants may borrow up to 95% of their home’s value. This does not apply to investment properties.2. HELOCs have a 10-year draw period. During the draw period, the borrower is required to make monthly minimum payments, which will equal the greater of (a) $100; or (b) the total of all accrued finance charges and other charges for the monthly billing cycle. During the draw period, the monthly minimum payments may not reduce the outstanding principal balance. During the repayment period, the borrower is required to make monthly minimum payments, which will equal the greater of (a) $100; or (b) 1/240th of the outstanding balance at the end of the draw period, plus all accrued finance charges and other fees, charges, and costs.The lender will calculate this amount by taking the outstanding Account Balance on the last day of the draw period and dividing it by 240 months and then adding any finance charge that accrues but remains unpaid during the monthly billing cycle plus any other fees, charges and costs to the fixed principal payment that is due. During the repayment period, the monthly minimum payments may not, to the extent permitted by law, fully repay the principal balance outstanding on the HELOC. At the end of the repayment period, the borrower must pay any remaining outstanding balance in one full payment.3. The time it takes to get cash is measured from the time the Lending Partner receives all documents requested from the applicant and assumes the applicant’s stated income, property and title information provided in the loan application matches the requested documents and any supporting information. Most borrowers get their cash on average in 21 days. The time period calculation to get cash is based on the first 4 months of 2024 loan funding's, assumes the funds are wired, excludes weekends, and excludes the government-mandated disclosure waiting period. The amount of time it takes to get cash will vary depending on the applicant’s respective financial circumstances and the Lending Partner’s current volume of applications. Closing costs can vary from 3.0 - 5.0%. An appraisal may be required to be completed on the property in some instances.4. Not all borrowers will meet the requirements necessary to qualify. Rates and terms are subject to change based on market conditions and borrower eligibility. This offer is subject to verification of borrower qualifications, property evaluations, income verification and credit approval. This is not a commitment to lend.5. The content provided is presented for information purposes only. This is not a The content provided is presented for information purposes only. This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. Other restrictions may apply.