A home equity line of credit (HELOC) can be useful when you are needing to borrow a lump sum to renovate your home, make a major purchase, or consolidate debt. Using your home equity as collateral, a HELOC is revolving credit. This open-ended loan may be be charged up or paid down over the set term of the loan. The rate of interest can fluctuate (typically every month).
With a HELOC, the lender will approve you for a predetermined amount of credit - the largest sum you may borrow at any one time. Your credit status, income, debts and other financial circumstances will determine your credit limit. In order to ascertain your property's current market value, you are going to need an appraisal on your property. Your credit limit will be determined on all of the above, as well as a percentage of your property's appraised market value, which is subtracted from the balance owed on your current mortgage.
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