A home equity line of credit (HELOC) can be helpful when you are hoping to borrow a lump sum to renovate your home, make a big purchase, or consolidate debt. A form of revolving credit, a HELOC is secured by your home equity. This is an open ended of loan that can be paid down or charged up for the term of the loan, similar to a credit card. The loan interest typically fluctuates monthly
Your lender will set your credit limit (the largest amount you can borrow) with the HELOC. In determining the credit limit, your income, debts, credit status and additional monetary obligations will be considered. An appraisal is required on your house to assess the property's current market value. Your credit limit will be based on all of the above, as well as a fraction of your home's appraised market value, which is subtracted from the balance owed on your present mortgage loan.
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