When a big expense arrives unexpectedly, such as a new roof or medical bills, individuals grapple with tight budgets, leading to anxiety about the future. Brian Jahanbin, the founder and CEO of Maxim Lending, Corp, says that sometimes the solution is right there in front of the person: the equity in their home. “A home equity line of credit (HELOC) can be very helpful, as it provides a revolving line of credit that is secured by the value of the home,” he explains. “With careful consideration about its use over the long term, a HELOC can create some breathing room so that the homeowner can take care of their needs without breaking their budget.”
How do home equity lines of credit (HELOCs) work?
A HELOC is different from a traditional loan, as it is a flexible line of credit based on the equity a homeowner has built in their home. In general, a lender will assess the house’s equity, which is the difference between the home’s appraised value and the outstanding mortgage balance.
“However, at Maxim Lending, Corp, we do not require an appraisal in most cases,” Brian Jahanbin says. “We also offer HELOCs for applicants whose credit scores are as low as 620, so there is a lot of flexibility in who is able to apply and potentially receive one.”
Once a home’s equity is determined, a credit line is approved by the lender. While it can vary, it is usually up to a certain percentage of the home’s value. Upon approval, the homeowner can draw funds from their HELOC as needed. The draw period is typically between 5-10 years, during which time the person can borrow against the HELOC, repay it, and borrow again. When the draw period is finished, the HELOC will now be in its repayment phase, meaning that the homeowner will no longer be able to borrow funds and must instead repay both the interest and the principal, generally over a timeframe of 10-20 years.
What can a HELOC be used for?
The recipient of a home equity line of credit can use it for multiple financial needs. “It is really dependent on the needs of the homeowner and is one of the biggest differences between a HELOC and a traditional loan,” Brian Jahanbin says. “With the latter, such as a car loan, you are locked into a specific purpose. With the former, however, you have the ability to direct the money to where it will do the most good.”
At Maxim Lending, Corp, clients have leveraged their HELOCs to take care of large financial expenditures, such as:
- home renovations or improvements, such as kitchen remodeling or bathroom upgrades.
- debt consolidation, including credit card balances or personal loans, as a HELOC may offer lower interest rates.
- college tuition, whether it is for the homeowner or their children.
- emergency funds, allowing the homeowner to avoid relying on high-interest credit cards during a financial crisis and to have quick access to funds.
“With the right approach, a HELOC can help to alleviate financial pressure and perhaps even level-up a person’s life in a crucial way,” Brian Jahanbin believes. “It is all a matter of taking a close look at its possible usage and seeing its downstream benefits.”
How can a HELOC be managed effectively?
Like any loan, a HELOC offers convenience but should be managed responsibility to avoid pitfalls. Brian Jahanbin recommends that the homeowner be sure to borrow only what is needed and can be comfortably repaid.
“Additionally, factor the HELOC into your budget, particularly its repayment phase,” he says. “Don’t forget to include both the principal and the interest payments so that you can absorb them into your monthly budget without any problems.”
Also recommended is monitoring interest rate fluctuations, as HELOCs might have variable interest rates that are tied to market benchmarks. “Last, when we consult with our Maxim Lending, Corp clients, we suggest not using a HELOC for something non-essential, such as a vacation,” Brian Jahanbin states. “Instead, try to tap into your home equity for a long-term purpose to get the most benefit from it.”
Brian Jahanbin invites any homeowner who wants to learn more about a HELOC to call Maxim Lending, Corp at 1-888-345-9333. “We will help you to determine if one is right for your financial goals,” he says. “No question is too small, so feel free to reach out to us. With accurate information, you will be able to open doors for yourself and feel confident about the decisions that you make.”
About Maxim Lending, Corp
Maxim Lending, Corp was founded by Brian Jahanbin, who has been ranked in America’s top 1% originators, and is a full-service brokerage firm that treats every customer as an individual, not a number. It assists loan applicants nationwide, is licensed in multiple states, and offers conventional, FHA, VA, jumbo, hard money, and NQM loans. Brian Jahanbin is highly regarded in the mortgage industry, as he has closed over $1B in transactions. For more information, please visit Maxim Lending, Corp’s website.
