Unlocking the value of your home can feel a bit like discovering hidden treasure in your attic. 

A Home Equity Line of Credit (HELOC) is a key tool homeowners can use to tap into their property’s equity to get access to cash now for everything from renovations to debt consolidation. 

UnitedOne Credit Union’s team of Local Home Loan Experts explore the ins and outs of HELOCs on the latest episode of their podcast, At Home on the Lakeshore, so homeowners can make informed decisions and not feel like they’re on a treasure hunt gone awry.



A HELOC provides a revolving line of credit that can be used as needed, up to a predetermined limit based on the home’s value and existing mortgage balance. 

When you take out a HELOC, you can access funds during a draw period, typically lasting 10 years. During this time, you can borrow, repay, and borrow again, making it a flexible option for managing expenses. After the draw period, you enter a repayment phase where you must pay back the borrowed amount over 10 years. 

“Think of it like a credit card,” said UnitedOne Mortgage Specialist Kari Johnsrud, NMLS # 441414. “You’ve got a limit you can borrow up to and you just use it as you need it and as you pay it back, it’s available for you to use again. 

“It's so nice because once you set it up you can use it from year to year for different things as you need it over that 10-year draw period. Like, one year you need a new driveway or the next year you want to put a deck on the back of your house. It doesn’t have to be home improvements, either.” 

A HELOC can also be used to fund things like a vacation, wedding, college tuition, a boat, or debt consolidation. 

While HELOCs and Home Equity Loans can both be used to fund a wide variety of items, it’s important to remember they are two distinctly different products and should not be confused for being the same thing. 

A Home Equity Loan is a term loan where the lender pays the borrower a lump sum and the borrower must pay it back over the term of the loan with a monthly principal and interest payment. 

A HELOC is a revolving line of credit where the borrower can keep withdrawing money up to a pre-agreed credit limit and only have to pay monthly interest on the balance during the 10-year draw period. After the draw period is over, the HELOC enters the repayment phase for 10 years to pay the full balance. 

“Your payments are interest only,” Johnsrud said about the first 10 years of a HELOC. “So, sometimes that can be a little bit easier to swallow when you have larger amounts you want to set up the line for and you need to take a bunch of it out initially. You’re going to have a little bit of a larger payment, but then later on when you have a lower balance you’re going to have a smaller payment.” 

It would be wise during the draw period to make extra payments in addition to the interest in order to reduce your balance, especially for when the 10 years is complete and you enter the repayment phase. 

“There are no pre-payment penalties to pay these down (early),” said UnitedOne Mortgage Specialist Linda Serrano, NMLS # 441416. “When you want to open that line again, you just apply principal reduction payments so that will open up that line of credit for you again. 

“After 10 years then we go into repayment itself. So, you could either refinance and open that 10-year line of credit again so you can open it up for another 10 years. Or you can say I’m not going to utilize it anymore and I just want to pay it off.” 

Besides no pre-payment penalties, another advantage of taking out a HELOC at UnitedOne Credit Union is there are no annual fees. 

Homeowners who take out HELOCs also enjoy the convenience of being able to transfer funds from their line of credit directly to their checking themselves, and can do so in their Digital Banking account. 

“You have control over all of those funds,” said UniteOne Mortgage Specialist Julie Peot, # 441412. “You make the transfer from your line of credit to your checking account and then use your debit card or personal check. 

“We can go up to 95% of the value of your house, so maybe it’s a larger line of credit. It’s revolving. As you pay it down, more is available to you. But again, there is that limit.” 

The rate for a HELOC is not locked in and adjusts according to the Prime Rate, which is variable. The Federal Reserve can change rates up to eight times a year.  

Overall, a HELOC can seem like a hidden treasure for homeowners looking for flexibility when utilizing the equity in their home.  

Not sure what type of loan is right for you? Whether you’re looking to buy your first home or tap into the equity of your current house to do a renovation, UnitedOne’s team of Local Home Loan Experts are your trusted source in Manitowoc and Sheboygan for all your home loan needs.

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