What is a HELOC?

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When you have a need for 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 are looking for. Using the equity in your home as collateral, a HELOC is revolving credit. This open-ended loan may be be charged up or paid down over the set term of the loan. The rate of interest changes (typically monthly).

The lender will determine your credit limit (the maximum amount you may borrow) in the HELOC. In determining your credit limit, your pay-rate, debts, credit status and other monetary obligations will be reviewed. An appraisal is required on your house to assess the home's market value. Your home's current value, subtracted from your remaining mortgage balance helps to determine your specific credit limit.