Home Equity Line of Credit: the Facts

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When you need to borrow cash 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 your home equity. This is an open ended of loan that may be paid down or charged up for the term of the loan, similar to a credit card. The loan interest rate generally fluctuates monthly

In a HELOC, the lender approves you for a specific credit amount - the highest amount you are able to borrow at any given time under the plan. Your credit status, salary, debt and various other financial circumstances can determine your credit limit. You will be required to do an appraisal of your home to determine your home's up-to-date market value. Your property's up-to-date value, subtracted from your remaining mortgage balance helps to set your particular credit limit.