When you need to borrow cash to consolidate funds or make a big-ticket purchase, a home equity line of credit (HELOC) can help. A HELOC is a type of revolving credit secured by your home equity. This is an open ended of loan that may be paid down or charged up for the term of the loan, similar to a credit card. The rate of interest fluctuates (usually monthly).
In a HELOC, your lender approves you for a particular credit amount - the largest sum you may borrow at any given time. Your credit score, income, debts and other financial circumstances can determine your credit limit. So that the lender can assess your house's present market value, you will need an appraisal on your property. Your credit limit will be set considering 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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