Home Equity Line of Credit: the Facts

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When 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 need. A kind of revolving credit, a HELOC is secured by the equity in your home. This is an open ended of loan that can be paid down or charged up for the a set length of time, much like a credit card. The interest rate changes (generally monthly).

Your lender will set your credit limit (the maximum you may borrow) in the HELOC. In setting your credit limit, your income, debts, credit history and other financial circumstances will be reviewed. An appraisal is required on your house to assess the home's present market value. Your property's market value, subtracted from your remaining mortgage balance will help to determine your specific credit limit.