What is a HELOC?

When you have a need for some extra cash to make a large purchase, renovate your home, or pay off 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 is an open-ended of loan that may be paid down or charged up for the a set length of time, similar to a credit card. The loan interest typically fluctuates monthly

The lender will set your credit limit (the highest amount you can borrow) in the HELOC. In deciding your credit limit, your income, outstanding debt, credit status and other monetary circumstances will be considered. So that the lender can assess your house's present market value, you are going to need an appraisal on your property. Your credit limit will be determined on all of the above, in addition to a fraction of your property's appraised value, which is subtracted from the balance owed on your present mortgage loan.