A home equity line of credit (HELOC) can be helpful when you are hoping to borrow a lump sum to renovate your home, make a major purchase, or consolidate debt. A HELOC is a kind of revolving credit secured by your home equity. This open-ended loan may be be charged up or paid down over the loan term. The loan interest rate typically fluctuates every month
In a HELOC, your lender approves you for a predetermined credit amount - the maximum amount you are able to borrow at any one time with the agreement. In deciding the credit limit, your pay-rate, outstanding debt, credit history and other financial obligations will be taken into account. So that the lender is able to ascertain your house's current market value, you will need an appraisal on your property. Your credit limit will be based on 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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