HELOC Frequently Asked Questions

A FlexFirst HELOC™ is a Home Equity Line of Credit (HELOC) that replaces your primary mortgage and includes an integrated checking account with an automatic “sweep” feature. The sweep function automatically moves your income from the checking account to pay down the HELOC balance, which can help you pay off your home faster and significantly reduce the total interest paid.

This is a variable rate loan which fluctuates based on market conditions and is based off of the 30 day monthly average SOFR rate.

Higher interest rates: Lead to higher interest payments, potentially reducing the amount of principal paid down through the sweep feature.

Unlike a traditional mortgage with a single, fixed principal and interest payment, the FlexFirst HELOC’s interest is calculated based on the average daily balance on your line of credit. This is the key to saving money when you leverage the sweep feature.

With a FlexFirst HELOC, applying a large payment has an immediate impact. Your average daily balance would decrease that day and every day going forward, reducing the amount of interest owed.

Interest may be tax deductible. You hould consult your tax advisor for clarification.

When you set up income or deposits to go directly into the checking account linked to your FlexFirst HELOC sweep, any funds remaining in the account at the end of each day, are “swept” out and applied to your  loan resulting in a zero dollar balance in the checking account each day. If you need to make a purchase or pay a bill, simply use the debit card or checks associated with your account, and a ‘sweep’ from the HELOC portion of your loan into your checking will happen automatically to cover the expenses. This will add/increase your loan balance, but because your regular income is continuously being swept to pay it down, the balance can stay lower overall.

The main goal of a FlexFirst HELOC is to provide the consumer with a home loan product that gives them the ability to pay off a mortgage faster and save a significant amount of interest over the life of the loan.

If you deposit all your income into the checking account tied to your FlexFirst HELOC, any income remaining after expenses will be used to pay down your principal balance on the HELOC. Essentially the difference between the amount of money the household takes in and the amount that the household spends will be applied to the principal balance after interest. So, the greater the surplus, the faster the payoff, and the lower the surplus, the slower the payoff.

Yes, you can sell your home if it is financed using a FlexFirst HELOC just as you would if you had a traditional mortgage. The outstanding balance would be paid off using the sale proceeds and the lien will be removed from the property.

The process for applying for a FlexFirst HELOC is very similar to the process of applying for a traditional mortgage. You will need to provide income documentation, proof of employment and other required documentation. Please contact one of our experienced loan officers for more details.

Closing costs on home equity lines of credit (HELOCs) are generally based on the total credit line and not just on initial draw. Very similar cost when compared to a Traditional 1st lien mortgage.

Financially disciplined borrowers who are good at exercising self-control and making smart choices about money, sticking to realistic budgets and managing debt effectively in order to achieve financial goals and overall well-being. It’s the perfect product for those who are cash-flow positive and are interested in paying off their home faster. 

Consolidating debt can result in a faster payoff time and a lower interest cost when compared to high interest credit cards and loans.

There are no pre-payment penalties associated with the FlexFirst HELOC.

The equity or HELOC portion of the FlexFirst HELOC can be used for things such as:

1. Some homeowners use the HELOC portion of the loan as a central financial hub, directing the majority of their income into the HELOC account to pay down the balance and then drawing from the equity to cover daily expenses as they arise.
2. Home renovations and repairs: This is a common use of a HELOC. Funds used for home improvements may increase your properties value and the interest paid on the funds used for the renovations may be tax-deductible. Consult with a tax advisor for guidance.
3. A HELOC can be used to pay college tuition or other educational costs, often at a lower interest rate than private student loans.
4. Investment property: You can use the equity from your primary residence to purchase a second home or rental property. This carries significant risk but can also be a way to build wealth.
5. For homeowners buying a new house before selling their old one, a HELOC can provide short-term financing to cover a down payment.
6. A HELOC can provide capital for a business start-up or expansion. However, using your homes equity for this type of expense is risky, as you are putting your home on the line for a business venture.
7. Emergency fund: For a sudden major expense, a HELOC can offer a lower-interest alternative to credit cards. 

Accessing your funds is easy on a FlexFirst HELOC. You will receive a debit card, checks, and have access to online and mobile banking where you can intiate transfers.

Yes, you can use your FlexFirst HELOC  on your primary residence to purchase other real estate, such as an investment or rental property. You can draw from the HELOC to fund a down payment and closing costs on a new property. This allows you to leverage the value in your current home without liquidating other savings. If you have enough available credit, you can potentially purchase a less expensive investment property outright with the HELOC funds.

The FlexFirst HELOC consists of two phases:
1. a draw period (10 years) consisting of escrow and interest only payments that allow you to borrow funds from your homes equity, repay the principal balance and borrow again up to the available credit limit as needed.
2. a repayment period (20 years) where you are expected to make principal, interest and escrow payments without further access to your homes equity.

For the first 10 years, you are only required to make monthly payments covering the interest on the loan and any funds required for escrows on the home. Please note that additional payments can and are encouraged to be made during this period of time to ensure you are taking full advantage of how this type of loan helps you to pay down your home faster.

After the 10-year, interest-only period ends, the outstanding balance of the loan will be amortized over 240 months (20 years) using a variable rate. During this phase of the loan, you will have a principal and interest payment plus escrow, due monthly just like you would on a traditional loan. Once you enter the 20 year repayment period, the HELOC (home equity line of credit) portion will no longer be available to use.