What to Look for in a HELOC
Know what to pay attention to in a HELOC.
HELOC stands for Home Equity Line of Credit. It is a line of credit based on the appraised value of the home minus the outstanding balance on the mortgage. For example:
|Appraised Value of Home||$100,000|
|Percentage x 75%|
|Percentage of Appraised Value||$75,000|
|Less the Balance Owed on Mortgage||-$40,000|
|Potential Line of Credit||$35,000|
Lenders typically set a fixed period during which you can make withdrawals from the credit line. Some lenders may permit you to renew the credit line after this period. Some will require payment in full of the outstanding balance at the end of the period. Others may allow repayment over a fixed period.