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Understanding HELOCs: How a Home Equity Line of Credit Can Work for You

Published: June 6, 2025

In the ever-changing housing market of the Denver metro area, homeowners are continually seeking financial tools to navigate rising costs and leverage their property's value. One such tool is the Home Equity Line of Credit (HELOC), a flexible borrowing option that allows you to tap into your home's equity for various financial needs. Colorado Credit Union offers competitive HELOC options, including our new Interest-Only HELOC, tailored to meet the unique demands of Denver homeowners.​

For more information on Colorado Credit Union’s HELOCs visit www.ccu.org/borrow/home-equity-loans. You can also access our free online calculator for a guideline on how much equity you may have in your current home.

Understanding HELOCs


A HELOC is a revolving line of credit secured by the equity in your home—the difference between your home's current market value and any outstanding mortgage balances. Unlike a traditional loan that provides a lump sum, a HELOC lets you borrow funds as needed, up to an approved limit, during a specified draw period. This flexibility makes it an attractive option for ongoing expenses or projects.​

“Home Equity Lines of Credit are an excellent financial resource by taking advantage of the valuable equity in your home to responsibly fund expensive life purchases, without having to pull from your savings account,” explained Shauna Brazil, Colorado Credit Union’s Senior Vice President of Lending.

Ways to Use Your HELOC Funds


A HELOC is one of the most flexible financial tools available to homeowners. Here are some smart and strategic ways a HELOC can be used — especially relevant for homeowners in the Denver metro area where home equity has grown significantly in recent years:

1. Home Improvements & Renovations

  • Upgrade your kitchen, bathrooms, or outdoor spaces

  • Add square footage or finish a basement

  • Increase your home’s value before selling

 2. Education Expenses

  • Pay for tuition, books, or room and board

  • Help a child or grandchild with college costs

  • Bridge temporary gaps in education funding

3. Debt Consolidation

  • Pay off high-interest credit cards or personal loans

  • Simplify monthly payments

  • Potentially lower your overall interest rate

4. Down Payment on a Second Home or Primary residence

  • Use your equity to help buy a second home, vacation home, or investment property

  • Primary residence purchase to avoid Primary Mortgage Insurance (PMI) if purchaser doesn’t have the full 20% down payment.

5. Large Purchases

  • Buy a vehicle, camper, or electric bike

  • Cover wedding or adoption expenses

  • Finance solar panels or energy-efficient appliances

6. Emergency Fund

  • Keep as a financial safety net for unexpected medical bills, or urgent home repairs

  • Peace of mind during uncertain times

7. Investing in Your Future

  • Launch or expand a small business

  • Invest in rental property renovations

  • Cover certifications or training for a career shift

 

Utilizing a HELOC for Home Purchases


While traditionally used for home improvements or debt consolidation, a HELOC can also serve as a strategic resource when purchasing a new home. For instance, homeowners can use a HELOC to fund a down payment on a primary residence to avoid paying Primary Mortgage Insurance (PMI) or be used toward a down payment on a secondary home. This approach can be particularly advantageous in competitive markets where timing is crucial.​

Benefits of Choosing Colorado Credit Union for Your HELOC

Opting for a HELOC through a credit union like Colorado Credit Union offers several advantages:​

  • Competitive Rates: Credit unions often provide lower interest rates compared to traditional banks. Colorado Credit Union offers HELOC rates as low as 7.75% APR*, with terms that include a 10-year draw period and a 15-year repayment period. ​

  • Flexible Terms: With options like refinancing at the end of the draw period to keep funds available for future needs, Colorado Credit Union ensures peace of mind for our members. ​

  • Personalized Service: As a member-focused institution, Colorado Credit Union prioritizes personalized service, ensuring that your financial solutions align with your individual needs.​

Our new Interest-Only HELOC is now available. It offers the benefits of a HELOC while allowing homeowners the opportunity to pay only the accrued interest for the first ten years. To learn more about our Interest-Only HELOC, visit: www.ccu.org/borrow/home-equity-loans.

“The Interest-Only HELOC offers flexibility in how you want to make your monthly payments,” Brazil added.  “The first ten years offers lower monthly payments by only requiring paying on the interest that has accrued. You can apply principal payments on your own terms. Your HELOC, your way.”

Ready to apply? You can apply online at www.ccu.org or contact us at 303.978.2274 for additional information.

 

 

* Prime -.25% Annual Percentage Rate is available with combined loan to value of no more than 90%, loans of at least $10,000, and is subject to a purchase transaction and credit qualification. APR will vary based on Prime Rate as published in the Wall Street Journal which was 7.50% as of 1/1/2025. APR will not exceed 18% or be lower than 3.75%. Not all applicants will qualify for the lowest rate. Estimated closing costs range from $478-$1719, including appraisal. Contact a tax advisor for tax deductibility information. Second lien real estate loans are available on Colorado residences only. Property insurance is required. Colorado Credit Union membership required. Escrow funds are not collected and will not be included within the monthly payment. Other restrictions may apply, call for details. Equal Housing Opportunity. Membership Eligibility Required.