Home Equity

What's a HELOC and how do I use it?

What’s a HELOC?

HELOCs resemble a second mortgage and also function like a credit card. You are able to draw from this fund whenever needed. Therefore, you don’t have to withdrawal it all at once. The main difference between a HELOC and mortgage loan is that a mortgage is used to buy a home. You never see the money since it’s given to the seller and you pay monthly for a certain period of time. A HELOC is a line of credit that uses your home as collateral that you can withdrawal from at any time. The interest is only paid on the amount that you use. For example, you could get a $50,000 HELOC and only use $10,000 of it. You will only pay interest on the $10,000 that you borrowed.

Six Smart Ways to Use a HELCO

Renovate rooms

This is a great way to increase your home’s value. One of the best rooms to start with is the kitchen. Many homebuyers look for a modern kitchen that is updated with current trends. Using a HELOC to pay for this renovation is a great way to get the most bang for your buck. After your kitchen, focus on bathrooms and then bedrooms.

Convert unused space into living space

Finish your basement or convert unused space into something cozy and livable. This is a great way to add more space to your current layout and will make potential homebuyers intrigued with the amount of usable area in the home. You could also consider adding a mother-in-law suite somewhere in the layout. Adding something like this has the potential of adding quite a bit of value to your home.

Give your home a makeover

Replace siding, doors, garage, etc. for a better outdoor appearance. Having a nice outside appearance will attract buyers and will allow your home to stand out in the neighborhood. It’s amazing what a fresh coat of paint or a new roof can add to a home’s appearance!

Pay off debt

You can pay off high interest debt such as those typically associated with credit cards. Be careful if you choose to do this because you are gambling your home on it. HELOCs will offer a lower interest rate but have a high level of risk associated with them. Make sure you have a great plan in place to ensure you are able to pay off the HELOC and not default.

Pay for a vacation, college, car, etc.

Along with home improvements and debt consolidation, a HELOC can be used to pay for “fun”. Although this is a very tempting option, make sure you have a solid plan on paying back the loan. REMEMBER… your collateral is your house. If something were to happen and you weren’t able to pay the loan back, you will lose your home!

HELOCs are great tools to use when used correctly. Whether it’s fixing up your home, consolidating debt, or having a little fun; BrightStar CU can get you set up with a low-rate HELOC!


Rear View Of Loving Couple Walking Towards House

What to Expect When Purchasing a Home

Rear View Of Loving Couple Walking Towards House

Mortgages & Home Buying 101

Owning a home is a dream for many people. It’s something they hope to accomplish at some point in their lives. Sure, it is a hard task that requires a lot of work, but with proper budgeting anyone can do it! Mortgages and home buying can be very confusing and scary but researching the steps will relieve some stress. Provided below are common questions and answers people have.

It takes how many years to save for a down payment on a home?

Unfortunately, saving for a down payment on a home can take a lot of hard work and planning. Using the following example, we can illustrate the process you can take to figure out how long you will need to budget for.

Assume you make $56,000 and save around 15% of your income each month. That’s around $8,400 a year. It would take about 5 years to build a 20% down payment for a $216,000 home.

Buying insurance on your loan will allow you to have a smaller down payment but might be offset with greater monthly payments. With proper planning and a bulletproof budget, owning a home can be easy and a great goal to look forward to!

What Should I Expect at Closing?

Once you’ve taken all of the steps in saving, getting a mortgage, and finding your dream home, it’s time to close! There are few things you should be prepared for.

  • Your lender will send you a closing disclosure that outlines the terms of your loan, final closing costs, and outstanding charges or fees.
  • Do a final walk-through of the property to make sure everything is as it should be. For example, make sure any repairs that were made are as expected and that you are happy with your future home.

What to Bring to Closing

  • You will sign many legal documents between you and your lender.
  • Pay attention to all of the costs and escrow items. A majority of the time, the buyer is required to bring funds in the form of a cashier’s check made out to the escrow company.

Present Parties

  • Closing agent
  • Attorney
  • Title company representative
  • Home seller and their real estate agent

Closing Documents

  • Loan estimate and Closing disclosure
  • Initial escrow statement
  • Mortgage note and Deed of Trust
  • Certificate of occupancy


Save money and refinance.

5 Ways to Cut Your Monthly Expenses

Save money and refinance.
Little changes make a difference!

Ever notice how your monthly expenses always seem to equal whatever salary you’re making, even after you get raises? The phenomenon is called “lifestyle creep” and it can keep you from reaching all kinds of financial goals, from paying down debt, to saving for retirement. One way to get lifestyle creep under control is to have any future raises you get direct deposited into savings – like a 401(k) account through your employer, or an Individual Retirement Account (IRA). But here are five things you can do right now to cut your monthly expenses.

  1. Make a Budget
    The first step toward cutting expenses is to make a budget, so you know exactly where your money is going. Start with major categories, like rent or mortgage, utilities, transportation, meals, clothing, and entertainment. Then break it down even further to ferret out items that are ripe for reducing. Many people, for example, are surprised to learn just how much they pay for pricey lattes and snacks from restaurants and vendors that would cost a fraction of that amount if they were made at home or purchased at a grocery store.
  2. Lower Your Mortgage Payment
    The biggest monthly expense for many people is their home mortgage. If you haven’t examined that loan since you bought your home years ago, it’s quite possible that you could save a lot of money – both now and over the life the loan – if you refinance at a lower interest rate. To know whether refinancing makes sense, you’ll need to add what you’ll spend on closing costs into the calculation of your new monthly payment.
  3. Get an Insurance Checkup
    If you have a car, you absolutely must have car insurance. But it pays to shop around periodically to make sure you’re getting the best deal. If you have a decent emergency fund on hand in case of an accident, one way to lower your premiums is to increase your deductible. Also be sure to examine your policy for “extras” you may not need. For example, you could be paying for roadside assistance both through your insurance policy and through AAA.
  4. Examine Your Auto-Payments
    Putting your regular bills on auto-payment can be a really smart way to protect your credit rating by ensuring you’re never late with a payment. However, if auto-pay causes you to keep paying for items or services you don’t really need or use, it’s no bargain. A few common culprits include unused gym memberships, subscriptions to magazines that aren’t read, and cable or satellite TV plans that include loads of premium channels that are rarely watched.
  5. Cut the Cord
    If you’ve already ditched your land line, good for you! If not, doing so is one of the quickest and most pain-free ways to trim your expenses. Most all of us have our cell phones with us all the time anyway, and if you really like the feel of a traditional phone in your hand, a VOIP (Voice Over Internet Protocol) plan that provides phone service over the Internet is a lot cheaper than traditional land line service.