How Does a HELOC Work?
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If you have a need for some extra money to make a major purchase, renovate your home, or pay the balance on a high-interest credit card, a HELOC (home equity line of credit) may be just what you're looking for. Using your home equity as collateral, a HELOC is revolving credit. This open-ended loan can be charged up or paid down during the set term of the loan. The interest rate fluctuates (generally every month).
Your lender will determine your credit limit (the highest amount you may borrow) in the HELOC. In deciding your credit limit, your salary, debts, credit history and any other financial circumstances will be considered. You will be required to schedule an appraisal to assess your home's present market value. Your home's up-to-date value, subtracted from your remaining mortgage balance will help to set your particular credit limit.
Real Property Finance can answer questions about Home Equity Lines of Credit and many others. Call us: 310-379-5997.