What is a HELOC?

If you need some extra money to make a big purchase, remodel your home, or pay the balance on a high-interest credit card, a HELOC (home equity line of credit) may be just what you're looking for. A HELOC is a form of revolving credit secured by your home equity. This is an open-ended loan that can be paid down or charged up for the a set length of time, much like a credit card. The loan interest rate typically fluctuates every month

The lender will specify your credit limit (the largest amount you can borrow) in the HELOC. Your credit status, rate of pay, debts and other financial information can determine your credit limit. You will be required to schedule an appraisal to assess your home's present market value. Your credit limit will be based on all of the above, as well as a percentage of your property's appraised market value, which is subtracted from the balance owed on your present mortgage.