When you want to borrow cash to consolidate funds or make a large purchase, a home equity line of credit (HELOC) can be useful. A HELOC is a form of revolving credit secured by your home equity. This open-ended loan can be charged up or paid down over the loan term. The rate of interest fluctuates (usually monthly).
In a HELOC, your lender will approve you for a predetermined credit amount - the highest amount you can borrow at any given time under the plan. In deciding the credit limit, your income, debts, credit status and any other monetary circumstances will be considered. You will be required to schedule a home appraisal to determine your home's current market value. Your credit limit will be set on all of your financial information, as well as a percentage of your home's appraised value, which is then subtracted from the balance owed on your present mortgage loan.
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