How Does a HELOC Work?
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When you have a need for some extra cash to make a big 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 are looking for. A type of revolving credit, a HELOC is secured by the equity in your home. This is an open-ended of loan that can be paid down or charged up for the a set length of time, similar to a credit card. The interest rate can fluctuate (typically monthly).
In a HELOC, your lender will approve you for a specific credit amount - the highest amount you are able to borrow at any one time under the plan. In setting your credit limit, your salary, outstanding debt, credit history and other financial circumstances will be considered. So that the lender is able to ascertain your property's current market value, you'll need an appraisal on your property. Your home's current value, subtracted from your remaining mortgage balance will help to set your particular credit limit.
At Cason Home Loans, we answer questions about Home Equity Lines every day. Give us a call at 863-286-4824.