Home Equity Line of Credit: the Facts

When you need some extra cash to make a large purchase, renovate your house, or pay off a high interest credit card, a HELOC (home equity line of credit) may be just what you need. Using your home equity as collateral, a HELOC is revolving credit. This is an open-ended loan that may be paid down or charged up for the a set length of time, much like a credit card. The loan interest usually fluctuates monthly

In a HELOC, the lending institution will approve you for a particular amount of credit - the largest amount you are able to borrow at any one time with the agreement. In setting the credit limit, your pay-rate, outstanding debt, credit status and any other monetary circumstances will be taken into account. In order to ascertain your home' present market value, you'll need an appraisal on your property. Your property's current value, subtracted from your remaining mortgage balance helps to set your specific credit limit.