A home equity line of credit (HELOC) can be helpful when you are needing to borrow a lump sum to remodel your home, make a major purchase, or consolidate debt. Using your home equity as collateral, a HELOC is revolving credit. This is an open ended loan that may 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).
Your lender will set your credit limit (the maximum amount you may borrow) with the HELOC. In deciding your credit limit, your pay-rate, debts, credit status and additional financial circumstances will be considered. An appraisal will be required on your home to determine the property's present market value. Your property's up-to-date value, subtracted from your remaining mortgage loan balance helps to determine your particular credit limit.
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