What is a Home Equity Line of Credit and How Does it Work?


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In life, you often face major home improvement projects, unexpected costs, education expenses,

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or the need to consolidate debt.

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A home equity line of credit, or HELOC, could help you achieve your life priorities. At Bank of America®, we want to help you understand how you might put a HELOC to work for you. A HELOC is a line of credit borrowed against the available equity of your home. Your home’s equity is the difference between the appraised value of your home and your current mortgage balance.

On screen copy:Value of homeMortgage balanceHome’s Equity

Through Bank of America, you can generally borrow up to 85% of the value of your home minus the amount you still owe.

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For example, say your home’s appraised value is $200,000. 85% of that is $170,000. If you still owe $120,000 on your mortgage, you’ll subtract that, leaving you with the maximum home equity line of credit you could receive as $50,000.

On screen copy:$200,000 Value of homex85%$170,000-$120,000 Mortgage balance$50,000 Max. HELOC

Much like a credit card, a HELOC is a revolving credit line that you pay down, and you only pay interest on the portion of the line you use.

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With a Bank of America HELOC, there are no closing costs, no application fees, no annual fees, and no fees to use the funds. Plus, Bank of America offers rate discounts when you sign up for automatic payments,

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as well as discounts based on the funds you initially use when opening the HELOC.

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And there’s Preferred Rewards, which extends benefits to you as your qualifying Bank of America balances grow. The interest rate is often lower than other forms of credit, and the interest you pay may be tax deductible, but you should consult a tax advisor.

On screen copy:Please consult your tax advisor regarding interest deductibility as tax rules may have changed.

Most HELOCs have a variable rate, which means the interest rate can change over time based on the Wall Street Journal Prime Rate.

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And Bank of America offers you the option to convert $5,000 or more of your balance to a fixed rate,

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so you can take advantage of fixed monthly payments and protect yourself from rising interest rates. Continue to use your home equity line of credit as needed for the duration of your borrowing period, usually 10 years.

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Once that borrowing period ends, you’ll continue to pay principal and interest on what you borrowed. You’ll typically have 20 years for this repayment stage. If a HELOC sounds right for you, get started today by giving us a call, visiting a financial center, or applying online at bankofamerica.com/HomeEquity.

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And be sure to inquire about all the ways we can assist you with rate discounts.

On screen copy:Interest Rate DiscountsAutomatic PaymentsOpening FundsPreferred Rewards

No matter what large expenses you may face in the future, a home equity line of credit from Bank of America could help you achieve your life priorities.

On screen copy:What would you like the power to do?®Bank of America® logo

On screen copy:Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. Sequences shortened. Screen images simulated. All rights reserved. Bank of America, N.A., Member FDIC. assets-images-global-logos-icon-ehl-CSX9c596024.svg Equal Housing Lender © 2022 Bank of America Corporation. 4652820

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