Home Equity Line of Credit (HELOC) — First Horizon National Corporation

A Home Equity Line of Credit (HELOC) from First Horizon National Corporation is a flexible borrowing solution that allows homeowners to tap into the equity built in their residence. Designed for individuals who want ongoing access to funds for home improvement, debt consolidation, education expenses, or unexpected costs, a HELOC functions like a revolving line of credit secured by the borrower’s home. This product combines the lower cost of secured borrowing with the convenience of a credit line that can be drawn, repaid, and redrawn during the draw period.

Key Features

• Revolving credit line: Borrow up to an approved credit limit during the draw period; pay interest only on amounts actually drawn.
• Variable interest rate: Rates typically adjust periodically and are generally tied to a publicly published index plus a margin. Monthly payments can change with rate movement.
• Draw and repayment periods: Most HELOCs have a draw period (often several years) when borrowers may draw funds and make interest-only or principal-plus-interest payments, followed by a repayment period when any outstanding balance must be repaid.
• Secured by home equity: The loan is secured by the property; available credit depends on the amount of equity, combined loan-to-value ratios, and underwriting factors.
• Flexible use: Funds may be used for home improvements, major purchases, refinancing higher-interest debt, college expenses, or as an emergency reserve.

Benefits

• Lower interest rates: Because a HELOC is secured by real estate, interest rates tend to be lower than unsecured lines of credit or credit cards.
• Interest-only payment options: During the draw period, many borrowers qualify to make interest-only payments, which can help with short-term cash flow management.
• Pay as you go: You pay interest only on funds you use, not on the entire approved limit, which can be cost-effective for intermittent needs.
• Tax considerations: Interest may be tax-deductible when used to substantially improve the residence, subject to current tax laws and individual circumstances. Borrowers should consult a tax advisor for guidance.

Costs and Fees

HELOCs often include various costs that borrowers should consider. Typical fees can include application fees, appraisal fees, closing or origination fees, and annual or inactivity fees. Some HELOCs may have prepayment penalties or cancellation fees under specific conditions. First Horizon may offer promotional fee structures or options to reduce closing costs depending on the borrower’s eligibility and account terms. Always review the loan estimate and disclosure documents to understand the full cost structure.

Eligibility and Underwriting

Approval for a HELOC from First Horizon depends on several underwriting criteria. Common factors include credit score, income and employment verification, current debt obligations, property value, and the amount of equity available in the home. Lenders typically limit the combined loan-to-value (CLTV) ratio—which considers any existing mortgage plus the HELOC—to a maximum percentage of the property’s appraised value. Documentation requirements may include pay stubs, tax returns, bank statements, and a property appraisal.

Risks and Considerations

• Variable-rate exposure: Payments may increase if interest rates rise. Borrowers should consider rate volatility and structure payments to manage potential increases.
• Secured nature: Because the HELOC is secured by the home, failure to repay could result in foreclosure. Responsible borrowing and budgeting are essential.
• Reduced equity: Drawing on a HELOC reduces the homeowner’s available equity, which may affect future financing options or the ability to sell or refinance.
• Fees and upfront costs: Closing costs can offset some of the benefits of a lower rate; evaluate the net benefit for your specific needs.

How to Use a HELOC Wisely

• Use the line for projects that add long-term value to your home, such as major renovations, rather than short-lived expenses.
• Consider borrowing when rates are favorable and pay down principal when possible to reduce interest costs over time.
• Keep an emergency buffer and avoid using the HELOC for discretionary spending that could lead to prolonged debt cycles.
• Review account statements regularly and track rate adjustments and payment schedule changes.

Typical Application Process

The application process usually begins with an inquiry and prequalification to estimate potential borrowing capacity. Next steps commonly include completing an application, submitting income and asset documentation, and arranging a property appraisal. After underwriting and approval, closing occurs where applicable fees are paid and the line is established. During the draw period, funds may be accessed by check, electronic transfer, or other methods offered by the bank. At the end of the draw period, a repayment schedule is outlined for the remaining balance.

Comparison with a Home Equity Loan

Unlike a home equity loan, which provides a lump-sum amount with fixed-rate, fixed-term payments, a HELOC offers a revolving line with typically variable rates and flexible draws. A home equity loan can be preferable for borrowers who need a specific, one-time amount and want predictable monthly payments, while a HELOC is better suited for ongoing or uncertain funding needs.

Conclusion

A HELOC from First Horizon National Corporation can be a versatile financial tool for homeowners seeking low-cost access to liquidity secured by their property. It offers flexibility, competitive interest rates relative to unsecured credit, and convenient access to funds. Prospective borrowers should weigh the benefits against the risks of variable rates and the fact that the loan is secured by their home. Careful planning, clear purpose for the funds, and a thorough review of terms and fees will help determine whether a HELOC aligns with personal financial goals.

Address Bank: Memphis, Tennessee, U.S.
Bank: First Horizon National Corporation
Headquarters: Memphis
Products: Loans & Credit
Type: Home Equity Line of Credit (HELOC)