A home equity line of credit (HELOC) can be useful when you are looking to borrow a lump sum to remodel your home, make a large purchase, or consolidate debt. A form of revolving credit, a HELOC is secured by your home equity. This is an open-ended loan that may be paid down or charged up for the term of the loan, much like a credit card. The rate of interest can fluctuate (generally monthly).
Your lender will set your credit limit (the biggest amount you can borrow) in the HELOC. In determining your credit limit, your income, outstanding debt, credit history and other financial obligations will be taken into account. You will be required to schedule a home appraisal to assess your home's current market value. Your property's current value, subtracted from your remaining mortgage balance will help to determine your particular credit limit.
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