How Does a HELOC Work?
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When you want to borrow cash to consolidate funds or make a big-ticket purchase, a home equity line of credit (HELOC) can help. Using the equity in your home as collateral, a HELOC is revolving credit. 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 rate of interest fluctuates (generally monthly).
The lender will determine your credit limit (the maximum you can borrow) in the HELOC. Your credit score, salary, debt and various other financial information will determine your credit limit. In order to assess your house's current market value, you'll need an appraisal on your property. Your credit limit will be set on all of the above, in addition to a fraction of your home's appraised market value, which is then subtracted from the balance owed on your present mortgage.
Real Property Finance can answer questions about Home Equity Lines of Credit and many others. Call us at 310-379-5997.