Home Equity Line of Credit: the Facts

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If you need some extra money to make a large purchase, renovate your home, or pay off a high interest credit card, a HELOC (home equity line of credit) may be just what you need. Using your home equity as collateral, a HELOC is revolving credit. This open-ended loan can be charged up or paid down during the loan term. The loan interest rate generally fluctuates every month

In a HELOC, your lending institution will approve you for a specific credit amount - the largest amount you can borrow at any given time under the plan. In setting the credit limit, your pay-rate, debts, credit history and any other monetary circumstances will be considered. So that the lender can ascertain your home' current market value, you will need an appraisal on your property. Your property's current value, subtracted from your remaining mortgage balance helps to set your specific credit limit.