How Does a HELOC Work?
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When you need some extra money to make a large purchase, remodel your house, or pay the balance on a high interest credit card, a HELOC (home equity line of credit) might be just what you're looking for. A HELOC is a kind of revolving credit secured by the equity in your home. This open-ended loan can be charged up or paid down over the set term of the loan. The rate of interest fluctuates (usually every month).
The lender will set your credit limit (the maximum you may borrow) with the HELOC. In setting the credit limit, your income, outstanding debt, credit history and other financial circumstances will be considered. So that the lender can ascertain your home' present market value, you will need an appraisal on your home. Your credit limit will be based on all of your financial information, as well as a percentage of your home's appraised market value, which is then subtracted from the balance owed on your current mortgage.
Alternative Mortgage Group can answer questions about Home Equity Lines of Credit and many others. Call us: 561-395-4264.