Wedding Catering Cost Calculator

HELOC (Home Equity Line of Credit) Calculator

(The amount you intend to actually borrow from the line)

Your HELOC Estimates

Total Home Equity: $0

Maximum Credit Line Available: $0

Current Combined LTV: 0%

Estimated Monthly Interest-Only Payment: $0

function calculateHELOC() { var homeValue = parseFloat(document.getElementById('homeValue').value); var mortgageBalance = parseFloat(document.getElementById('mortgageBalance').value); var ltvLimit = parseFloat(document.getElementById('ltvLimit').value) / 100; var interestRate = parseFloat(document.getElementById('interestRate').value) / 100; var drawAmount = parseFloat(document.getElementById('drawAmount').value); if (isNaN(homeValue) || isNaN(mortgageBalance) || isNaN(ltvLimit) || isNaN(interestRate) || isNaN(drawAmount)) { alert("Please enter valid numerical values."); return; } // Calculations var totalEquity = homeValue – mortgageBalance; var maxBorrowingCapacity = homeValue * ltvLimit; var maxLineAvailable = maxBorrowingCapacity – mortgageBalance; // Handle negative scenario (underwater or exceeding LTV) if (maxLineAvailable < 0) { maxLineAvailable = 0; } var combinedLTV = ((mortgageBalance + drawAmount) / homeValue) * 100; var monthlyInterestPayment = (drawAmount * interestRate) / 12; // Update DOM document.getElementById('resEquity').innerText = "$" + totalEquity.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resMaxLine').innerText = "$" + maxLineAvailable.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resCLTV').innerText = combinedLTV.toFixed(2) + "%"; document.getElementById('resPayment').innerText = "$" + monthlyInterestPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('heloc-results').style.display = 'block'; }

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Understanding Your Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit, or HELOC, is a revolving line of credit that allows you to borrow against the equity you have built in your home. Unlike a standard home equity loan, which provides a lump sum, a HELOC functions much like a credit card: you have a limit, you can spend as needed, and you only pay interest on what you actually use.

How Does the HELOC Calculation Work?

Lenders typically determine your HELOC limit based on several factors, primarily your Loan-to-Value (LTV) ratio. Here is the step-by-step breakdown used by our calculator:

• Step 1: Determine Maximum Allowable Debt: The lender decides a maximum percentage of your home's value they are willing to lend against (often 80% to 90%).
• Step 2: Subtract Existing Liens: From that maximum figure, the lender subtracts what you already owe on your primary mortgage.
• Step 3: Establish the Line: The remaining balance is the maximum HELOC limit you may qualify for.

Interest-Only Payments vs. Principal

Most HELOCs come with a "Draw Period" (typically 10 years) during which you are often only required to make interest-only payments. This is why our calculator provides an interest-only estimate. However, once the draw period ends, you enter the "Repayment Period," where you must pay back both the principal and interest, which can significantly increase your monthly costs.

Realistic Example

Suppose your home is worth $400,000 and your current mortgage balance is $250,000. If a lender offers an 85% LTV limit:

1. 85% of $400,000 = $340,000 (Maximum total debt allowed).
2. $340,000 – $250,000 = $90,000 (Your maximum HELOC limit).
3. If you withdraw $20,000 at an 8% interest rate, your monthly interest-only payment would be approximately $133.33.

Important Considerations

While HELOCs offer flexibility, remember that your home is the collateral. If you cannot make the payments, you risk foreclosure. Additionally, HELOC interest rates are usually variable, meaning your monthly payment could increase if market interest rates rise.