How Does a HELOC Work?
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If you have a need for some extra money to make a big purchase, remodel your house, or pay off a high-interest credit card, a HELOC (home equity line of credit) may be just what you are looking for. A HELOC is a form of revolving credit secured by the equity in your home. This open-ended loan can be charged up or paid down during the loan term. The loan interest usually changes monthly
In a HELOC, your lender approves you for a predetermined credit amount - the maximum amount you are able to borrow at any one time with the agreement. In setting the credit limit, your income, outstanding debt, credit history and any other monetary obligations will be reviewed. You are required to do a home appraisal to assess your home's current value. Your credit limit will be set considering all of the above, in addition to a fraction of your home's appraised value, which is subtracted from the balance owed on your current mortgage.
American Commerce Mortgage can answer questions about Home Equity Lines of Credit and many others. Give us a call at 714-970-9700.