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Finance for Homeowners

How to use home equity to Improve Your Financial Health During COVID-19

COVID-19 has left many with challenges, home equity could be used as a way to improve your financial health. Learn more today.

COVID-19 has left many with challenges, home equity could be used as a way to improve your financial health. As we entered a new decade, no one imagined that a pandemic was coming to impact lives by wiping out millions of jobs and crushing the economy in a matter of weeks. But that is exactly what COVID-19 did. Fortunately for some people, they’d already built an emergency fund to get them through the next few months. But many others had only just begun to build a safety net, or they’d never had the opportunity to put money aside.

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No matter the situation you find yourself in, the time is now for planning to improve your financial health. But where do you start? What should you do? 

If you own a home, one option you may want to consider is applying for a Home Equity Line of Credit, or HELOC. Not only can a HELOC provide you some cash flow relief, it can also protect you and your family down the road. 

financial health during COVID-19

Improving Your Financial Health During COVID-19: What is a HELOC?

A Home Equity Line of Credit (HELOC) provides homeowners access to a low-interest, flexible line of credit using their house as collateral. Unlike a home equity loan, where you borrow the whole amount as a lump sum, a HELOC allows you to tap into the value of your home. Instead of owing the full amount of a loan, like a HELOAN, a HELOC turns your equity into a line of credit that you can borrow from as needed, pay back and borrow from again. Whatever amount you borrow is also the amount you have to pay back.

Historically, there are many reasons homeowners have used HELOCs — home improvements, car purchases, and debt consolidation to name a few. But, during COVID-19, HELOCs may also offer homeowners a potential safety net during this uncertain time due to the financial flexibility the line of credit offers.

Improving Your Financial Health During COVID-19: How a HELOC works

A HELOC provides you access to a line of credit, borrowed against your home, usually with a lower interest rate than a credit card. In order to keep your budget in check, HELOCs are designed as a revolving line of credit, providing the flexibility to withdraw the amount needed, repay the money, and repeat. It is set up through two phases — a draw period and a repayment period. 

Draw Period

The draw period is when you can withdraw money and use your line of credit via bank transfer, check or HELOC-card. The phase is usually for a one-year period of time, but it can be renewed annually up to ten years. The Draw Period makes allowances for interest-only payments.

Repayment Period

Once your draw period ends, the repayment period on your HELOC begins. The length of this period is determined by your balance at the start of the repayment phase, typically 10-15 years. For some lenders, it can be 20 years, but as with most lines of credit, if you are able to pay it off sooner, you can. 

Improving Your Financial Health During COVID-19: HELOC benefits

From covering an emergency situation, like a roof leak or new water heater, to improving upon your home office space or gym so you can take care of your work and health while in COVID-19 quarantine, a HELOC may offer you a variety of benefits depending on your needs, home equity, and your economic status at this time.

However you choose to use your HELOC, you have the freedom to borrow as you go, like a credit card, but with lower interest. 

HELOC qualifications

Now that you understand more about what a HELOC is and how it works, the next step is to understand the requirements for your application. Qualifications for a HELOC include:

  • Owning a home
  • Your credit score 
  • Home equity 
  • Debt-to-income ratio
  • Your bill payment history

While all are essential requirements, one of the most important is determining the equity in your home. By calculating the value of your home against what you still owe on your mortgage, you can determine if a HELOC will provide you the money needed to assist you during this time. 

Choosing a HELOC lender

Finding a digital lender is especially important during a time where we are all social distancing due to COVID-19. The more you can do from your home right now, the better. With that in mind, it’s important to find a lender that has experience in the digital world. A HELOC through Prosper allows you to finish your online application in minutes.

Recognizing the importance of accessibility during this pandemic, Prosper offers you a simple online process that keeps you at home when it matters most as you focus on improving financial health during COVID-19.

Home Equity, Improving Financial Health and COVID-19, How do I begin?

As the reality of COVID-19 and its impact begins to set in, it is important to know that you may be able to improve your financial wellness during this time. Prosper’s mission is to help build financial well-being for users, like you. This is done through service based on trust, clarity, and sincerity. If you think using some of your home equity, and a HELOC may be a good way to improve your financial health and provide a solution to any money issues you are experiencing now, or may experience in the future, your first step begins with our online application. 

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To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

Eligibility for a HELOC up to $500,000 depends on the information provided in the HELOC application. Borrower must take an initial draw of $50,000 at closing. Subsequent draws are prohibited during the first 90 days following closing. After the first 90 days following closing, subsequent draws must be $1,000 or more (not applicable in Texas). Loans above $250,000 require an in-home appraisal. Loans above $250,000 require title insurance.

The time it takes to get cash is measured from the time the Lending Partner receives all documents requested from the applicant and assumes the applicant’s stated income, property and title information provided in the loan application matches the requested documents and any supporting information. Spring EQ borrowers get their cash on average in 18 days. The time period calculation to get cash is based on the last 6 months of 2021 loan fundings, assumes the funds are wired, excludes weekends, and excludes the government-mandated 3-day right of rescission grace period. The amount of time it takes to get cash will vary depending on the applicant’s respective financial circumstances and the Lending Partner’s current volume of applications.

Spring EQ cannot use a borrower’s home equity funds to pay (in part or in full) Spring EQ non-homestead debt at account opening. Minimum draw in Texas is $4,000. To access HELOC funds, borrower must request convenience checks.

Interest rates may be adjusted based on factors related to the applicant’s credit profile, income and debt ratios, the presence of existing liens against and the location of the subject property, the occupancy status of the subject property, as well as the initial draw amount taken at the time of closing. Speak to a Prosper Agent for details.

Qualified applicants may borrow up to 97.5% of their home’s value (not applicable in Texas). This does not apply to investment properties. For Texas HELOCs, qualified applicants may borrow up to 80% of their home’s value.

HELOCs through Prosper may not be available in all states. Please carefully review your HELOC credit agreement for more information.

All HELOCs are underwritten and issued by Spring EQ, LLC, an Equal Housing Lender. NMLS #1464945.

Prosper Marketplace NMLS Prosper Marketplace, Inc. NMLS# 111473

Licensing & Disclosures NMLS Consumer Access  



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221 Main Street, Suite 300 | San Francisco, CA 94105
6860 North Dallas Parkway, Suite 200 | Plano, TX 75024
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