What is a HELOC?

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When you need some extra money to make a large purchase, remodel your home, or pay the balance on a high-interest credit card, a HELOC (home equity line of credit) may be just what you need. Using the equity in your home as collateral, a HELOC is revolving credit. This open-ended loan may be be charged up or paid down during the loan term. The interest rate changes (generally monthly).

With a HELOC, the lending institution will approve you for a specific credit amount - the highest amount you may borrow at any one time with the agreement. Your credit status, income, debts and other financial information can determine your credit limit. An appraisal is required on your house to determine the home's market value. Your credit limit will be based considering all of your financial information, in addition to a fraction of your property's appraised value, which is subtracted from the balance owed on your present mortgage loan.

At Alerus Mortgage, we answer questions about Home Equity Lines every day. Give us a call: 952 417 8481.

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