If you need some extra money 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're looking for. A kind of revolving credit, a HELOC is secured by your home equity. This open-ended loan may be be charged up or paid down over the set term of the loan. The loan interest rate usually fluctuates monthly
The lender will determine your credit limit (the maximum you can borrow) with the HELOC. In deciding your credit limit, your salary, debts, credit status and additional financial obligations will be taken into account. So that the lender can assess your house's current market value, you will need an appraisal on your home. Your credit limit will be set considering all of your financial information, in addition to a fraction of your property's appraised market value, which is subtracted from the balance owed on your existing mortgage loan.
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