When you have a need for 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're looking for. A type of revolving credit, a HELOC is secured by the equity in your home. This is an open ended of loan that can be paid down or charged up for the term of the loan, much like a credit card. The rate of interest fluctuates (typically monthly).
The lender will determine your credit limit (the maximum you can borrow) with the HELOC. In setting the credit limit, your income, debts, credit history and any other monetary circumstances will be reviewed. An appraisal is needed on your home to determine the property's current market value. Your credit limit will be based considering all of your financial information, in addition to a percentage of your property's appraised market value, which is then subtracted from the balance owed on your existing mortgage.
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