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How to Use a HELOC for Home Improvement

With housing shortages and skyrocketing home prices in many parts of the country, many have opted to make home improvements rather than buying a new home. Others have made improvements to get their home ready to sell.

If you're considering joining the home improvement movement, paying for bigger projects might seem far off. But, you don't have to wait to love living in your home. That's where a home equity line of credit (HELOC) comes in.

Couple looking at laptop during home renovation project
How does a HELOC work? Is it only useful for home improvement projects?

A HELOC is a loan that uses your home's equity—the difference between what you owe on your home and what your home is currently worth—to help you pay for expenses like home improvement projects, but you can also use it for your child's education, consolidating medical bills or credit card debt and any other current or future expenses.

There is typically a "draw period" with a HELOC, a fixed time allowing you to withdraw money and make interest only payments on the amount borrowed. This draw period varies by lender, WaFd Bank's draw period is 10 years. After the initial draw period, if you have an outstanding balance remaining on your HELOC, you will begin paying monthly payments amortized over a 15-year period.

Check out WaFd Bank's HELOC calculator to crunch the numbers and take a look at WaFd Bank's current mortgage interest rates and APR.

A HELOC provides a readily available line of credit.

Similar to a cash out refinance, a HELOC gives qualifying homeowners the ability to borrow a certain amount of money and access the funds as needed without actually refinancing your home. If you do not end up withdrawing any money, you will not owe anything. This may be better than a cash out refinance as you will pay interest on the entire amount of your loan from the day you close, which might be higher than the interest rate you enjoy on your mortgage today.

A HELOC is a nice security blanket for unforeseen events that life may throw at you. It will also give you the flexibility to withdraw funds, pay back the principal when you can, and even withdraw later during the initial draw period without paying additional lending fees.

A HELOC may be more affordable than making large purchases by credit card or by starting another type of loan if you qualify for a competitive interest rate and do not have to pay annual renewal fees. You may also qualify for additional tax deductions available for any costs or interest paid on your HELOC based on your situation. Please consult your tax professional regarding the deductibility of interest and charges.

Using Home Equity for Renovations with WaFd Bank.

If you are ready to start on your own home improvement project, let WaFd Bank help you explore your financing options. Learn more or apply for a HELOC, or find your neighborhood loan officer at WaFd Bank.

WaFd Bank offers:
  • No annual renewal fees*
  • Competitive interest rates (and discount off your interest rate for automatic monthly payments from your checking account through WaFd Bank)
  • Closing costs paid by WaFd Bank for customers with existing home loans through WaFd Bank, or if the WaFd HELOC will be in first lien position, seeking up to $250,000 in lines of credit
  • HELOCs for primary homes and second homes, including jumbo HELOCS up to $700,000
  • HELOCs for investment properties (WaFd Bank is required to be in first lien position)
  • Interest-only payments for 10 years

Contact us today to see if a HELOC is right for you. Or, learn more about our other home loan solutions.

Real estate agent and clients looking at paperwork in new home

Check out WaFd Bank's HELOC calculator!

Use your home's equity to finance your next big project. Whether it's to pay for a home renovation or remodel, or pay consolidated bills, a no annual fee HELOC from WaFd Bank is often more affordable than using credit cards or other loans.

Try it now

All loans subject to credit approval. Restrictions apply, contact WaFd Bank for further information.

* The rate will never exceed 17.99% APR. Interest rate and APR (Annual Percentage Rate) are variable based on the Wall Street Journal Prime Rate plus a margin subject to credit approval of your credit history, loan to value, occupancy and EZ Pay requirements.

** Texas HELOCs: Notice concerning extensions of credit defined by section 50(a)(6), article XVI, Texas constitution: Section 50(a)(6), article XVI, of the Texas constitution allows certain loans to be secured against the equity in your home. Such loans are commonly known as equity loans.