A home equity line of credit (HELOC) can be helpful when you are needing a lump sum to renovate your home, make a big purchase, or consolidate debt. A kind of revolving credit, a HELOC is secured by the equity in your home. This open-ended loan can be charged up or paid down during the loan term. The rate of interest fluctuates (generally every month).
In a HELOC, your lending institution approves you for a specific credit amount - the largest sum you can borrow at any given time under the plan. Your credit status, salary, debts and other financial circumstances will determine your credit limit. So that the lender can assess your house's present market value, you will need an appraisal on your home. Your credit limit will be set on all of your financial information, in addition to a percentage of your property's appraised value, which is then subtracted from the balance owed on your present mortgage loan.