Home Equity Line of Credit: the Facts
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If you have a need for some extra money to make a big purchase, remodel your house, or pay the balance on a high interest credit card, a HELOC (home equity line of credit) might be just what you're looking for. A kind of revolving credit, a HELOC is secured by the equity in your home. This is an open ended of loan that may be paid down or charged up for the term of the loan, much like a credit card. The interest rate fluctuates (generally monthly).
Your lender will set your credit limit (the largest amount you can borrow) in the HELOC. Your credit score, salary, debts and other financial information can determine your credit limit. You will be required to schedule a home appraisal to determine your home's current value. Your credit limit will be based considering all of the above, in addition to a fraction of your home's appraised market value, which is then subtracted from the balance owed on your existing mortgage loan.
At American Commerce Mortgage, we answer questions about Home Equity Lines every day. Give us a call: 714-970-9700.