If you have a need for some extra cash 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 are looking for. A form of revolving credit, a HELOC is secured by the equity in your home. This open-ended loan can be charged up or paid down over the set term of the loan. The loan interest rate generally changes monthly
The lender will set your credit limit (the maximum you can borrow) in the HELOC. In deciding the credit limit, your pay-rate, debts, credit status and additional monetary circumstances will be considered. An appraisal will be required on your house to assess the property's market value. Your credit limit will be set on all of the above, as well as a percentage of your home's appraised market value, which is then subtracted from the balance owed on your current mortgage loan.
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