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HELOC 101: Take advantage of your equity
by First Financial Bank

Do you own a home that is worth more than the amount that is owed on the mortgage? You may be eligible for a line of credit secured by the equity you have in your home. This type of credit is called a home equity line of credit and in many cases is easier to qualify for with lower interest rates than other forms of credit. Whether you are ready to obtain a graduate degree or take the vacation of your dreams, life is better with equity.

What is a home equity line of credit?

A home equity line of credit (HELOC) is one of the prime ways that a homeowner can take advantage of the equity they have in their home to fund renovations, large purchases, consolidate debt, and more. A HELOC is essentially a second mortgage that provides you with a line of credit based on the equity that you have in your home. Unlike traditional loan options that only offer a lump sum, a HELOC allows you to borrow money as you need it over time. First Financial Bank can help you get access to a home equity line of credit to use funds now or in the future with no closing costs or approval fees. 

What is my equity?

In the simplest terms, home equity is calculated by taking the value of your home and subtracting the balance left on your first and second mortgage. For example, if you have a $100,000 home and you owe $60,000 on your mortgage, you have $40,000 (or 40 percent) in equity.

How much can I borrow?

To calculate how much you can borrow through a home equity line of credit, you must first determine the current value of your home. If you don’t know the current value of your home an estimate can be obtained through Zillow’s estimation tool. Once the current value is known, you must then determine the amount that is still owed on your mortgage. With these two numbers in hand, you are ready to calculate the amount that can be borrowed.

Now that you have a better understanding of your houses value, let’s figure out how much equity you have available.  In this example, we will estimate that you'll be borrowing 85% of your house's equity. To obtain the available equity in your home, take the estimated value of your home and multiply it by 85%. Subtract the amount still owed on any mortgage and this number is the maximum line of credit that can be offered.

Using the example above, the available equity of a $100,000 home with $60,000 remaining on the mortgage would be calculated as follows:

$100,000 x .85 = $85,000.

$85,000 - $60,000 = $25,000.

The maximum HELOC would be $25,000. 

How do I apply?

Are you ready to experience firsthand how life is better with equity? First Financial Bank makes it easier than ever to apply for a home equity line of credit. When you apply for a HELOC with us, we will waive closing costs and approval fees, saving you $1,000 in up-front costs. First Financial Bank currently lends in Ohio, Kentucky, Indiana, and Illinois. If you and the property are in any of those four states, you can start the application for your Home Equity Line of Credit on our website.

First Financial Bank has been helping our clients take another step on the path to success since 1863. You can stay in touch with us on Facebook, LinkedIn, Twitter, and our website.

    

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All loans subject to credit review and approval.