Home Equity Line of Credit: the Facts
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When you want to borrow some money to consolidate debts or buy a big-ticket item, a home equity line of credit (HELOC) may be useful. A kind of revolving credit, a HELOC is secured by the equity in your home. This is an open ended loan that may be paid down or charged up for the a set length of time, much like a credit card. The loan interest rate usually fluctuates every month
With a HELOC, the lending institution approves you for a predetermined credit amount - the maximum amount you may borrow at any given time. In setting your credit limit, your pay-rate, outstanding debt, credit history and any other monetary obligations will be taken into account. You are required to schedule an appraisal to assess your home's current market value. Your credit limit will be determined considering all of the above, in addition to a percentage of your home's appraised market value, which is subtracted from the balance owed on your present mortgage.
At American Commerce Mortgage, we answer questions about Home Equity Lines of Credit every day. Give us a call: 714-970-9700.