How Does a HELOC Work?
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A home equity line of credit (HELOC) can be helpful when you are hoping to borrow a lump sum to remodel your home, make a major purchase, or consolidate debt. A HELOC is a type of revolving credit secured by the equity in your home. This is an open ended of loan that may be paid down or charged up for the term of the loan, much like a credit card. The loan interest usually fluctuates monthly
With a HELOC, the lender approves you for a specific amount of credit - the maximum sum you can borrow at any one time under the plan. In determining the credit limit, your salary, debts, credit status and additional monetary obligations will be considered. An appraisal is required on your home to determine the property's current market value. Your credit limit will be based on all of the above, as well as a percentage of your property's appraised value, which is then subtracted from the balance owed on your present mortgage.
At The Mortgage Partner, we answer questions about Home Equity Lines of Credit every day. Give us a call: 9493957200.