If you need to borrow money to consolidate funds or purchase a big-ticket item, a home equity line of credit (HELOC) can help. A HELOC is a kind of revolving credit secured by the equity in your home. This open-ended loan may be be charged up or paid down during the set term of the loan. The interest rate can fluctuate (typically monthly).
In a HELOC, your lender will approve you for a specific amount of credit - the largest amount you may borrow at any given time under the plan. Your credit score, salary, debts and various other financial circumstances will determine your credit limit. You will be required to do an appraisal to determine your home's up-to-date market value. Your credit limit will be determined on all of the above, in addition to a percentage of your home's appraised value, which is then subtracted from the balance owed on your existing mortgage loan.
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