HELOC – Here’s What You Need to Know

Home Blog HELOC – Here’s What You Need to Know

Posted On: September 20, 2022 by Peoples Bank of Kankakee County in: Home Personal Finances

A home equity line of credit (HELOC) is a great way to fund large expenses using the equity you have built up in your home. What is a HELOC you may ask? Keep reading as we outline what it is and the benefits of having one set up. Let’s get started!

Let’s Begin with Home Equity

Home equity is the difference between your home’s market value and the amount that you owe on your mortgage. Both a home equity loan and a home equity line of credit allow you to borrow against this equity. With a home equity loan, you borrow a specific amount and make regular payments during a fixed repayment period. A home equity line of credit is a bit different. Unlike a conventional loan, a HELOC is something you establish ahead of time and use when and if you need it. In a way, it’s like a credit card, except with a HELOC, your home is used as collateral rather than being unsecured.

A home equity line of credit has a credit limit and a specified borrowing period. During that period, you can withdraw money up to your credit limit whenever you need it. If you don’t need the funds, the HELOC just sits there at no cost to you. You can use the HELOC funds when you need them and can continue to reuse the funds as you repay them. Once the term of the HELOC ends, you’ll repay the remaining balance with interest just like a regular loan. If you need cash and you have equity built up in your home, a Home Equity Line of Credit is a great solution offered by Peoples Bank of Kankakee County.

What Are HELOCS Used For?

Your home may be the most valuable asset you own. Borrowing against your equity may be a great way to free up cash for any number of purposes. You might access cash for:

Home remodel projects
College tuition or higher education
A new vehicle, motorcycle, or RV
Building a deck or pool
Wedding or travel expenses
Consolidate high-rate debts into a single loan
Cover emergency expenses
Almost anything – you decide!

Benefits of a HELOC

There are many benefits to utilizing a Home Equity Line of Credit:

A Home Equity Lines of Credit tends to have a lower interest rate than credit cards, making it attractive for debt consolidation.

A HELOC is a revolving source of funds you can access as you choose, making it attractive for ongoing projects.
Closing costs are low or non-existent.
A HELOC allows you to borrow in lesser amounts so that you’re only borrowing what you need when you need it. Borrowing only what you need can keep your interest and monthly payment low and lets you avoid unnecessary debt.
Interest might be tax deductible up to a certain threshold if you use the money for home improvements (consult your tax advisor).
Your HELOC will have a maximum interest rate cap, so even if interest rates rise, you have some protection.

You can pay back what was borrowed whenever you like. For example, if you need a short-term loan as you’re waiting for some money to come in, you could take a draw on your HELOC, pay interest for a short term, and then pay off the balance once you receive your funds.
Adding a HELOC to your credit portfolio and making regular on time payments could potentially boost your credit score.

Benefits of FlexLine

At Peoples Bank, we understand life comes with many unplanned expenses. Our FlexLine Home Equity Line of Credit is an easy way to finance your life. FlexLine offers:

0% APR for 90 days
Then variable rate of 5.40% or lower*
NO PAYMENTS for 3 billing cycles*
NO CLOSING COSTS*
Draw from your FlexLine when you need it - just write a check

FlexLine really is the best Home Equity Line of Credit in town. If you would like to connect with a lender to learn more about it, visit our website or stop in today!

*Introductory rate of 0% Annual Percentage Rate (APR) is fixed for the first 90 days. After 90 days, the following variable rates would apply: 4.45% APR for line limits of $100,000 or more; 4.95% APR for line limits of $50,000 to $99,999; and 5.40% APR for line limits of $25,000 to $49,999. The floor is 3.75% APR with a ceiling of 18% APR. The APR will vary based on the U.S. Prime Rate as published in the Wall Street Journal +/- a margin. The margin is based on your total line limit. As of July 28, 2022, the Prime Rate was 5.50%. The minimum line of credit to receive the introductory rate and qualify for no closing costs is $25,000. HELOC must be new money to the bank. For requests under $25,000, other HELOC options are available. Collateral cannot be classified as a manufactured or mobile home. Owner-occupied primary residence only. Homeowners insurance is required. Minimum payment may result in a balloon payment at maturity. Rates and APRs are subject to change without notice. Subject to credit approval. We reserve the right to discontinue this offer at any time. Other terms and conditions may apply. Please call for details.

An overdraft occurs when you do not have enough money in your account to cover a transaction, but we pay it anyway. We can cover your overdrafts in two different ways:

We have standard overdraft practices that are available after your account has been open for 30 days and as long as you maintain your account in good standing.
We also offer an overdraft protection plan, Overdraft Protection Sweep, a link to a savings account. It may be less expensive than our standard overdraft practices. To learn more, ask us about this plan.

This notice explains our standard overdraft practices.

What are the standard overdraft practices that come with my account?

After your account has been open for 30 days and as long as you maintain your account in good standing, we do authorize and pay overdrafts for the following types of transactions:

Checks and other transactions made using your checking account number
Automatic bill payments

We do not authorize and pay overdrafts for the following types of transactions unless you ask us to (see below):

ATM transactions
Everyday debit card transactions

We pay overdrafts at our discretion, which means we do not guarantee that we will always authorize and pay any type of transaction.

If we do not authorize and pay an overdraft, your transaction will be declined.

What fees will I be charged if Peoples Bank of Kankakee County pays my overdraft?

Under our standard overdraft practices:

We will charge you a fee of up to $30 each time we pay an overdraft.
The maximum daily overdraft fee per presentment or item paid using the Overdraft Reserve Program is $150.00 per day.
No per item handling fee will be charged on de minimis overdrafts. De minimis overdraft for this policy means transactions that overdraw your account by $30 or less.
There is an overdraft fee of $5 per day that will be charged beginning the 4th consecutive business day your account is overdrawn.

Nonsufficient funds (NSF) fees - if an item drafted by you (such as a check) or a transaction you set up (such as a preauthorized transfer) is presented for payment in an amount that is more than the amount of money in your account and we decide not to pay the item or transaction, you agree that we can charge you an NSF fee for returning the payment. Be aware that such an item or payment may be presented multiple times by the merchant or other payee until it is paid, and that we do not monitor or control the number of times a transaction is presented for payment. You agree that we may charge you an NSF fee each time a payment is presented if the amount of money in your account is not sufficient to cover the payment, regardless of the number of times the payment is presented.

PAYMENT ORDER OF ITEMS - The law permits us to pay items drawn on your account in any order (for purposes of this section "items" means checks, orders and electronic transactions). To assist you in handling your account with us, we are providing you with the following information regarding how we process those items. When processing checks and orders drawn on your account our policy is to pay lower numbered checks and orders in numerical sequence, but electronic transactions are paid first in the order received. The order in which items are paid is important if there is not enough money in your account to pay all of the items that are presented. There is no policy that is favorable in every instance. If the smallest items are paid first, you may have fewer NSF or overdraft fees, but the largest, and perhaps more important items (such as rent or mortgage payments) might not be paid. However, if the largest items are paid first, your most important items might be paid but it may increase the overdraft or NSF fees if funds are not available to pay all of the items. We think our policy attains a reasonable balance between minimizing additional costs to you and paying your more important items. We encourage you to make careful records and practice good account management. This will help you to avoid creating items without sufficient funds and incurring the resulting fees.

What if I want Peoples Bank of Kankakee County to authorize and pay overdrafts on my ATM and everyday debit card transactions?

If you also want us to authorize and pay overdrafts on ATM and everyday debit card transactions after your account has been open for 30 days, you may opt in.

You have an ongoing right to change this consent at any time. If your overdraft privilege has been revoked for any reason, the opt-in or opt-out selection may not apply. Please contact your nearest office for more information.

Alternate ways to Opt In/Out or make changes:

By Phone. Our Customer Care Representatives can be reached at 815-936-7600.
By Mail. Peoples Bank of Kankakee County, 333 E. Court Street, Kankakee, IL 60901
In Person. Please visit your local office and ask a representative to help you decide which plan is best for you.