When you have a need for some extra money to make a major purchase, remodel your house, or pay off a high-interest credit card, a HELOC (home equity line of credit) might be just what you're looking for. A HELOC is a kind of revolving credit secured by your home equity. This is an open ended of loan that can be paid down or charged up for the term of the loan, similar to a credit card. The rate of interest fluctuates (generally every month).
With a HELOC, the lending institution approves you for a specific credit amount - the maximum sum you are able to borrow at any given time. Your credit score, salary, debt and other financial circumstances can determine your credit limit. You will be required to have an appraisal to assess your home's present value. Your credit limit will be determined considering all of the above, in addition to a fraction of your property's appraised market value, which is then subtracted from the balance owed on your current mortgage loan.
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