Home Equity Line of Credit: the Facts

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A home equity line of credit (HELOC) can be useful when you are needing a lump sum to remodel your home, make a large purchase, or consolidate debt. A form of revolving credit, a HELOC is secured by the equity in your home. This is an open-ended loan that can be paid down or charged up for the a set length of time, much like a credit card. The rate of interest changes (generally monthly).

With a HELOC, the lender will approve you for a specific amount of credit - the largest sum you may borrow at any given time under the plan. Your credit history, salary, debts and other financial circumstances can affect your credit limit. In order to assess your house's current market value, you will need an appraisal on your property. Your credit limit will be set considering all of the above, in addition to a fraction of your property's appraised market value, which is subtracted from the balance owed on your existing mortgage loan.

Alerus Mortgage can answer questions about Home Equity Lines of Credit and many others. Give us a call at 952 417 8481.

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