How Does a HELOC Work?

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When you need some extra money to make a large purchase, remodel your home, or pay off a high interest credit card, a HELOC (home equity line of credit) may be just what you're looking for. A form of revolving credit, a HELOC is secured by the equity in your home. This is an open-ended loan that can be paid down or charged up for the term of the loan, similar to a credit card. The interest rate changes (generally monthly).

In a HELOC, your lending institution will approve you for a predetermined credit amount - the highest amount you may borrow at any given time with the agreement. Your credit history, rate of pay, debts and various other financial information will affect your credit limit. You will be required to schedule an appraisal to assess your home's present market value. Your property's up-to-date value, subtracted from your remaining mortgage loan balance will help to set your particular credit limit.

Financial Brokers of America can answer questions about Home Equity Lines of Credit and many others. Call us at 562-696-3139.