Home Equity Line of Credit: the Facts

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If you need to borrow some money to consolidate debts or make a major purchase, a home equity line of credit (HELOC) can help. A type of revolving credit, a HELOC is 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 usually changes monthly

Your lender will specify your credit limit (the highest amount you can borrow) with the HELOC. In determining your credit limit, your salary, outstanding debt, credit status and additional financial circumstances will be reviewed. An appraisal is required on your home to determine the home's present market value. Your home's current value, subtracted from your remaining mortgage loan balance helps to determine your specific credit limit.