When you need some extra cash to make a large purchase, renovate your home, or pay the balance on a high interest credit card, a HELOC (home equity line of credit) might be just what you need. A kind of revolving credit, a HELOC is secured by the equity in your home. This is an open-ended of loan that may be paid down or charged up for the term of the loan, much like a credit card. The rate of interest changes (usually monthly).
With a HELOC, your lending institution will approve you for a predetermined credit amount - the maximum sum you are able to borrow at any one time. In setting the credit limit, your income, debts, credit history and any other financial obligations will be considered. You will be required to do a home appraisal to assess your home's present value. Your home's market value, subtracted from your remaining mortgage loan balance helps to determine your specific credit limit.
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