A home equity line of credit (HELOC) can be helpful when you are needing to borrow a lump sum to remodel your home, make a big purchase, or consolidate debt. A form of revolving credit, a HELOC is secured by your home equity. This open-ended loan may be be charged up or paid down during the set term of the loan. The interest rate can fluctuate (usually monthly).
The lender will determine your credit limit (the largest amount you may borrow) with the HELOC. In determining your credit limit, your income, outstanding debt, credit history and additional monetary circumstances will be reviewed. You are required to do an appraisal on your home to determine your home's current market value. Your home's current value, subtracted from your remaining mortgage loan balance will help to determine your specific credit limit.
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