What is a HELOC?

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A home equity line of credit (HELOC) can be useful when you are looking to borrow a lump sum to remodel your home, make a big purchase, or consolidate debt. A HELOC is a kind of revolving credit secured by your home equity. This open-ended loan can be charged up or paid down during the set term of the loan. The rate of interest can fluctuate (generally monthly).

The lender will determine your credit limit (the largest amount you can borrow) in the HELOC. Your credit history, income, debts and various other financial circumstances will determine your credit limit. An appraisal is required on your house to assess the property's present market value. Your home's current value, subtracted from your remaining mortgage loan balance helps to determine your specific credit limit.