If you need to borrow money to consolidate debts or purchase a big-ticket item, a home equity line of credit (HELOC) might be useful. Using the equity in your home as collateral, a HELOC is revolving credit. This open-ended loan can be charged up or paid down during the set term of the loan. The loan interest generally fluctuates every month
In a HELOC, the lending institution will approve you for a particular amount of credit - the maximum sum you are able to borrow at any one time with the agreement. In setting the credit limit, your income, debts, credit history and other monetary circumstances will be reviewed. You are required to schedule an appraisal of your home to assess your home's present market value. Your credit limit will be set considering all of the above, in addition to a percentage of your home's appraised value, which is subtracted from the balance owed on your current mortgage.
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