What is a HELOC?

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When you need some extra money to make a major purchase, remodel your home, or pay off a high interest credit card, a HELOC (home equity line of credit) may be just what you need. A HELOC is a type of revolving credit secured by the equity in your home. This open-ended loan may be be charged up or paid down during the loan term. The loan interest rate generally fluctuates every month

Your lender will specify your credit limit (the maximum you may borrow) in the HELOC. In determining your credit limit, your pay-rate, outstanding debt, credit history and other financial circumstances will be considered. You will be required to schedule an appraisal on your home to determine your home's current value. Your credit limit will be based considering all of the above, as well as a fraction of your property's appraised value, which is subtracted from the balance owed on your current mortgage loan.