11/09/2022
You want to build wealth, but don't have the cash to do it. You've been working hard for years, but you still don't have the wealth you want.
You're not alone. The average American only has about $3,000 in savings. That's not going to get you very far. Saving up for a down payment on a rental property or other investment can take years.
A HELOC is a great way to start building your wealth without passing up on years of passive income & wealth accumulation. With a HELOC, you can use the equity in your home to get the cash you need now to buy more assets like real estate that will generate passive income and appreciation. Plus, since you're not selling your home, you can always use the HELOC as a backup plan if something happens and you need to access those funds quickly.
Hereโs how a home equity line of credit works:
1. A home equity line of credit, or HELOC, is a loan that uses your home equity as collateral. Typically, banks will let you borrow up to 70-75% of your homeโs value. I have seen certain lenders allow up to 80-85%
2. HELOCs are typically used for home improvement projects, debt consolidation, or other large expenses such as buying investment property.
3. To get a HELOC, you will need to apply with a lender and have your home appraised. I recommend credit unions, they typically have the best interest rates and customer service.
4. Once approved, you will be given a credit limit and can borrow funds as needed up to that limit. No need to swipe a card, you can withdraw cash, transfer to your checking account, wire funds to escrow, or simply write a check against the HELOC.
5. Itโs important to understand that HELOCs typically have variable interest rates tied to the โprime rate.โ So your monthly payments may fluctuate when interest rates are rising, like they are at the moment. Itโs important to build in a safety cushion in your budget for potential payment increases.
