Home Equity Line of Credit
A Home Equity Line of Credit (HELOC) is a form of revolving credit in which a home serves as the collateral. A home equity line of credit is a great way to pay for major home renovations, vehicles, education expenses, debt consolidation, and more!
It’s easy to apply! Use our convenient online application, give us a call at 901-380-7400 or stop by any of our banking centers.
| Loan to Value (LTV) | Terms and Draw Periods | APR |
|---|---|---|
| Up to 80% LTV | up to 20 years/12 year draw period | Prime + 0.00%^ |
| 81% to 90% LTV | up to 20 years/12 year draw period | Contact First South Financial for details. |
How Does a HELOC Work?
With a home equity line of credit, you are approved for a specific amount of credit, much like a credit card. First South Financial sets this amount by taking a percentage (up to 80%) of the home's appraised value and subtracting the balance owed on that mortgage.
Similar to a credit card, a HELOC gives you access to a maximum credit limit and allows you to borrow only what you need, when you need it, during an approved draw period. Your payments will reflect interest and principal on the amount you borrow, not the full line amount.
Because your home serves as collateral, a HELOC can offer lower interest rates than unsecured loans or credit cards.
Unlock Your Home's Potential!
You've worked hard to buy your home and create equity.
Now, a HELOC can help you do more! Remodeling, vehicle purchases, debt consolidation, and more.
The Draw Phase and Repayment Period
During the draw phase, you can access funds up to your approved credit limit. Funds can be used repeatedly as you repay the balance and minimum payments are based on interest plus principal.
After the draw phase ends, borrowing stops and the repayment period begins. You repay the outstanding balance over a fixed term. Payments are structured to pay off principal and interest.
This two-phase structure is what makes a Home Equity Line of Credit more flexible than a traditional loan.
Benefits of a First South Financial HELOC
- Loan-to-Value ratios as high as 90%
- No points, fees, or closing costs*
- Limits as high as $500,000
- Easy application and approval!
- A great low-interest rate
- Access funds via debit card or provided checks.
- No floor rate and no initial draw
- No transaction fees
- Long draw period of 12 years
- Long repayment period of 20 years
Frequently Asked Questions About HELOCs
Does a HELOC have a fixed or variable rate?
The First South Financial Home Equity Line of Credit has a variable interest rate. The rate is based on the prime rate plus a margin depending on the Loan-to-Value (LTV) of the home.
Although this has a variable rate, First South HELOCs do not have a floor rate. A floor rate is a rate the lender sets and that is the lowest rate for that loan. For example, a lender may advertise that the rate is Prime + 0% APR, but if they have a floor rate in place of 5.00% APR, the rate for the loan will never go below the floor rate.
Our HELOCs are variable rate loans tied to Prime plus a margin. If Prime drops, then the rate on our HELOCs will drop as well.
How Much Can I Borrow with a HELOC?
Your Home Equity Line of Credit amount is based on several factors, including:
- Your home’s appraised value
- The balance of your existing mortgage
- Your loan-to-value (LTV) ratio
- Credit history, income, and overall financial profile
For example (using 80% of the appraised value):
| Appraised Value of the Home | = $100,000 |
|---|---|
| Percentage | x 80% |
| Percentage of Appraised value | = $80,000 |
| Less Balance Owed on Mortgage | - $40,000 |
| Potential Line of Credit | = $40,000 |
In determining the line of credit amount, First South will also look at income, debts and other financial obligations, along with credit history.
First South Financial's home equity line of credit has a period of 12 years in which you can borrow the money, aka the "draw period". Although the draw period is 12 years, the repayment period is 20 years. This means that you pay off the amount you have borrowed over 20 years, not 12.
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Is a Home Equity Line of Credit the same as a second mortgage?
A HELOC is technically a second lien on your home, but unlike a traditional second mortgage, it offers revolving access to funds instead of a one-time payout.
Do I have to use the full HELOC amount?
No. With a Home Equity Line of Credit, you can borrow as little or as much as you need, up to your approved limit.
Can I pay off a HELOC early?
Yes. Many borrowers pay down their Home Equity Line of Credit early or reuse it as balances are repaid.
Get Pre-Approved for a HELOC
Know your financing options with a pre-approved loan from us. Getting pre-approved gives you more control over the entire process and allows you to focus on all the other decisions you have to make. Learn more about getting pre-approved.
We also offer many ways to make your home equity loan payments. Learn more about our loan payment options.
Have questions about HELOCS or getting approved? Let’s talk! We’d love to meet you. Visit any of our banking locations or call us at 901-380-7401.
*After the 6-month introductory period, the APR will revert to Prime, as listed in the Wall Street Journal, plus a margin of up to 2.00%. Maximum LTV is 90% and maximum APR is 18.00%. Rates may change quarterly based on rates published in the Wall Street Journal. After your loan is established and if you pay off and close your line of credit within 36 months of opening, you would be responsible for a recapture fee generally totaling between $300 and $3,000. The fee includes costs associated with originating your loan and may include, but not limited to, appraisal fee, credit report fee, flood certification, and title search. There may be an appraisal cost if the appraisal fee exceeds $500. Homeowners insurance is required, and flood insurance may be required. Excludes existing FSF HELOCs. Balances cannot be transferred from existing First South Financial loans or credit cards to a First South Financial HELOC. Loans are subject to approval criteria; not all applicants will qualify. Home Equity Line of Credit is available in TN, AR, and MS. Equal housing opportunity. All rates and offers are subject to change or withdrawal without notice. Please see First South Financial for complete details. NMLS# 410640
Equal Housing Lender. NMLS# 410640
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