When you have a need for some extra money to make a major purchase, renovate your house, or pay the balance on a high interest credit card, a HELOC (home equity line of credit) might be just what you need. Using the equity in your home as collateral, a HELOC is revolving credit. 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 every month).
Your lender will specify your credit limit (the largest amount you can borrow) with the HELOC. In determining your credit limit, your income, outstanding debt, credit history and any other financial obligations will be considered. You are required to schedule an appraisal to determine your home's up-to-date market value. Your property's market value, subtracted from your remaining mortgage loan balance helps to set your particular credit limit.
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