When you need to borrow some money to consolidate funds or make a major purchase, a home equity line of credit (HELOC) may be useful. Using the equity in your home as collateral, a HELOC is revolving credit. This open-ended loan may be be charged up or paid down over the set term of the loan. The loan interest rate usually changes every month
Your lender will set your credit limit (the highest amount you may borrow) in the HELOC. In setting your credit limit, your salary, outstanding debt, credit history and any other financial obligations will be reviewed. So that the lender can ascertain your property's current market value, you'll need an appraisal on your home. Your property's market value, subtracted from your remaining mortgage balance helps to determine your specific credit limit.
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