How Does a HELOC Work?
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A home equity line of credit (HELOC) can be helpful when you are looking a lump sum to remodel your home, make a major purchase, or consolidate debt. A HELOC is a type of revolving credit secured by your home equity. This open-ended loan may be be charged up or paid down during the set term of the loan. The rate of interest can fluctuate (typically every month).
The lender will determine your credit limit (the largest amount you can borrow) with the HELOC. In determining your credit limit, your pay-rate, outstanding debt, credit history and additional financial obligations will be reviewed. So that the lender can assess your home' current market value, you'll need an appraisal on your home. Your credit limit will be determined considering all of the above, as well as a fraction of your property's appraised value, which is then subtracted from the balance owed on your present mortgage loan.
At F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org), we answer questions about Home Equity Lines every day. Call us: 214-300-8756.