Tag: HELOC

A New Home Equity Line Available Through The Lending Coach — Is Your Home’s Equity Sitting on the Sidelines?

July 2, 2026 / Tom Bonetto / 0 Comments

For many homeowners and investors, their home isn’t just where they live—it’s also their largest financial asset. Over the past several years, home values have increased dramatically across much of the country, leaving many homeowners with significant untapped equity.

The question is: Is that equity working for you?

As The Lending Coach, one of the conversations I enjoy having with homeowners and investors is helping them determine whether a Home Equity Line of Credit (HELOC) makes sense—not necessarily because they need money today, but because having access to affordable financing can create opportunities tomorrow.

Let’s look at some of the smartest ways homeowners and investors can utilize a HELOC.

1. Eliminate High-Interest Credit Card Debt

This is often the biggest financial win.

Many credit cards charge interest rates well above 20%. A HELOC generally offers a significantly lower interest rate because it’s secured by your home’s equity. By replacing expensive revolving debt with lower-cost financing, many homeowners can:

Reduce their monthly payments
Pay off debt faster
Save thousands in interest over time
Simplify multiple payments into one

Of course, paying off credit cards only works if you avoid building those balances back up. A HELOC is a financial tool—not a license to overspend.

2. Invest in Home Improvements

Using your home’s equity to improve your home often makes excellent financial sense.

Common projects include:

Kitchen remodels
Bathroom renovations
New flooring
Roof replacement
Energy-efficient windows
Solar installations
Backyard landscaping
Swimming pools
Room additions

Not only can these improvements increase your enjoyment of your home, but many also help preserve or increase your home’s value.

3. Fund Investment Opportunities

Sometimes opportunities don’t wait.

A HELOC may provide access to funds for:

Purchasing an investment property
Down payment on a vacation home
Starting or expanding a business
Investing in income-producing assets

The key is making sure the investment is well thought out and fits your overall financial plan.

4. Help Pay for College

three young women wearing academic dress beside white wall

College costs continue to rise.

Some families choose to use home equity to help fund tuition, housing, or other education expenses instead of relying entirely on high-interest private student loans.

Every family’s situation is different, but a HELOC can provide flexibility when education expenses arise.

5. Create an Emergency Financial Safety Net

One of my favorite reasons to establish a HELOC is one many homeowners never think about:

You don’t have to use it.

Having a line of credit available can provide peace of mind if unexpected expenses arise, such as:

Major medical bills
Emergency home repairs
Vehicle replacement
Temporary job loss
Family emergencies

Unlike a traditional loan, you generally don’t pay interest unless you actually borrow from the line.

crop anonymous person calculating profit on smartphone calculator near banknotes

6. Consolidate Other Loans

Many homeowners also use a HELOC to refinance or consolidate:
Personal loans
Auto loans
Existing high-rate HELOCs
Medical debt

Reducing interest expense can improve monthly cash flow and simplify finances.

A New Generation of HELOC – Aven

Traditional HELOCs have worked well for years, but they haven’t always been the most convenient financial product.

I’m excited to now offer a newer option through one of our lending partners called Aven, which combines the flexibility of a Home Equity Line of Credit with the convenience of a Visa card.

Rather than waiting for checks or initiating transfers every time you need funds, qualifying borrowers can access their line much like they would use a traditional credit card.

Aven’s product combines a revolving HELOC with optional fixed-rate payment plans called Aven Simple Loans, giving homeowners flexibility in how they borrow and repay.

Some of the features that make this product stand out include:

A Visa card connected directly to your home equity line
Reuse your available credit as you pay down your balance
Make purchases, request cash advances, or complete balance transfers
No annual fee
No repeat draw or balance transfer fees after your initial draw
Choose between a variable-rate revolving balance or fixed-rate payment options
The ability to lock eligible balances into a fixed-rate loan after the draw period
Financing available for qualified owner-occupied homes with combined loan-to-value ratios up to 89%
Debt-to-income ratios up to 55% for eligible borrowers
Flexible qualification for salaried employees, self-employed borrowers, retirees, and many homes held in trust

Every borrower is different, and qualification depends on credit, income, equity, and other underwriting requirements.

A Unique Option for Second Homes and Investment Properties

One feature that truly sets this program apart is that it isn’t limited to your primary residence.

Qualified borrowers may also use this HELOC on second homes and investment properties—something that’s surprisingly difficult to find in today’s lending market. While many home equity products are restricted to owner-occupied homes, very few lenders offer flexible HELOC solutions for vacation homes and rental properties.

For real estate investors and homeowners with multiple properties, this can provide access to equity without having to refinance an existing low-interest first mortgage or sell an appreciating asset.

It’s another way to put the equity you’ve worked hard to build to work for you.

A HELOC Is a Tool—Not a Strategy

Like any financial tool, a Home Equity Line of Credit should be used thoughtfully.

Because your home serves as collateral, borrowing against your equity should always support a larger financial goal—not simply finance unnecessary spending.

When used wisely, a HELOC can help:

Improve monthly cash flow
Lower interest costs
Increase your home’s value
Create financial flexibility
Provide peace of mind for unexpected expenses

The right strategy depends on your overall financial picture.

Let’s Talk Before You Borrow

One of the biggest mistakes I see is homeowners applying for financing before talking with someone who can help them evaluate all of their options.

Whether you’re looking to access equity in your primary residence, a vacation home, or even an investment property, today’s HELOC options offer more flexibility than many homeowners realize.

As The Lending Coach, my goal isn’t simply to help you obtain a loan. It’s to help you determine whether borrowing against your home’s equity is the right financial move—and if it is, which option best fits your long-term goals.

Sometimes the best financial decision isn’t borrowing more. Sometimes it’s simply knowing your options.

Reach out to me directly—I’d love to talk strategy and explore how we can best take advantage of a HELOC to help you succeed.

As always, you can set up an appointment with me here…

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Starlight Mortgage. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

Which Is Better: Cash-Out Refinance or a HELOC?

September 3, 2019 / Tom Bonetto

When you need cash for home improvements, school tuition, a down payment for a 2^nd home, or debt consolidation, you might want to consider tapping into what could be your greatest source of wealth — your home equity.

Interestingly, there is more than one way to access your home equity – so it’s smart to compare available options to find the right fit.

Two of the most popular ways are a home equity line of credit (HELOC) and a cash-out refinance. Both of these loans can work if you want to access your home equity, but they do work rather differently.

The “Cash-Out” Refinance

Cash-out refinancing involves replacing your current home loan with a new one. The “cashing out” part of the equation means you essentially take out a larger home loan than you currently have so you can receive the difference as a lump sum. This strategy works for those who have equity in their homes due to paying down their mortgage balances or appreciation of their property.

To qualify for a cash-out refinance, you need to meet similar requirements as you would if you were applying for a first mortgage – and you must have the equity in your home to qualify, as well. You can borrow up to 80% of your home’s value.

So, let’s assume your home has a value of $300,000 and you want to take cash out. In that case, you could only borrow up to $240,000 through a cash-out refinance. If you owe that much or more on your home already, you wouldn’t qualify.

The Home Equity Line of Credit (HELOC)

While a cash-out refinance requires you to replace your current mortgage with a new one, a HELOC lets you keep your first mortgage exactly how it is.

Acting as a second mortgage, a HELOC lets you borrow against your home equity via a line of credit. This strategy allows you to withdraw the money you want when you want it, then repay only the amounts you borrow.

You now have two mortgage payments to make each month – your first mortgage payment and the new HELOC.

To qualify for a HELOC, you need to have equity in your home. Depending on your creditworthiness and how much debt you have, you may be able to borrow up to 85% of the appraised value of your home after you subtract the balance of your first mortgage.

For example, let’s say your home is worth $300,000 and the balance on your mortgage is currently $200,000. A HELOC could make it possible for you to borrow up to $255,000, because you would still retain 85% equity after accounting for your first mortgage and your HELOC.

Generally speaking, HELOCs work a lot like a credit card. You typically have a “draw period” during which you can take out money to use for any purpose. Once that period ends, you may have the option to repay the loan amount over a specific amount of time or you might be required to repay the balance in full.

Like credit cards, HELOCs also tend to come with variable interest rates, so you should be prepared for some rate volatility.

Key Differentiators

Before you decide between a HELOC or a cash-out refinance, it helps to do some analysis on your personal finances and your overall goals.

A cash-out refinance may work better if:

Your current home loan has a higher rate than you could qualify for now, so refinancing could help you save on interest
You need more than $50,000 overall
You prefer the stability of a fixed monthly payment or only want to make one mortgage payment every month
You have high-interest debts and want to consolidate them at the same rate as your new mortgage
What you save by refinancing — such as savings from a lower interest rate — outweighs the fees that come with refinancing
You are able to roll your closing costs/fees into the new loan amount so there are no out-of-pocket costs

A HELOC may work better if:

You are happy with your first mortgage and don’t want to trade it for a new loan
You need less than $50,000 overall
Your first mortgage has a lower interest rate than you can qualify for with today’s rates
You aren’t sure how much money you need, so you prefer the flexibility of having a line of credit you can borrow against
You want to be able to borrow up to 85% of your home’s value versus the 80% you can borrow with a cash-out refinance

Here’s a quick “snapshot” of two different options – notice how the smaller transaction works well with the HELOC, the larger one with the refinance.

As you can see, for the smaller transaction, the HELOC is less expensive overall – both in fees and monthly payment. However, once you go over the $50,000 mark in cash-back, it appears that the cash-out refinance is the most economical, all things considered.

I’d invite you to find out more from Gina Pogol at The Mortgage Reports here….and Holly Johnson at Magnify Money here….

HELOC Pros and Cons

Pros

Applying for a HELOC allows you to maintain the terms of your original mortgage, which can be an advantage if your rate is low.
You can use money from a HELOC for anything you want, and you only have to repay amounts you borrow.
HELOCs tend to come with lower closing costs than traditional mortgages and home equity loans.
HELOCs can generally be closed quicker than refinances

Cons

Taking out a HELOC means you’ll need to make two housing payments every month — your first mortgage payment and your HELOC payment.
Interest on a HELOC is no longer tax-deductible, unless the funds are used for acquisition or updating your home.
They are more expensive the more you borrow – if you are needing more than $50,000, your payments might be higher than that of a refinance
Since you only repay what you borrow and the interest rate on HELOCs is typically variable, you may not be able to anticipate what your monthly payment will be. Your monthly payment could also be interest only at first, meaning your payment won’t go toward the principal or help pay down the balance of your loan.
The interest rate on HELOCs tends to be higher than first mortgages, and their variable rates can seem riskier. You may also be required to pay a balloon payment at the end of your loan, so make sure to read and understand the terms and conditions.

Refinance Pros and Cons