What is a HELOC?
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When you need some extra money to make a big purchase, renovate your house, or pay off a high interest credit card, a HELOC (home equity line of credit) may be just what you are looking for. A kind of revolving credit, a HELOC is secured by the equity in your home. This is an open-ended of loan that can be paid down or charged up for the term of the loan, similar to a credit card. The rate of interest can fluctuate (typically every month).
The lender will determine your credit limit (the maximum you can borrow) with the HELOC. Your credit history, income, debt and various other financial circumstances can determine your credit limit. So that the lender is able to assess your house's current market value, you'll need an appraisal on your home. Your home's current value, subtracted from your remaining mortgage balance will help to determine your specific credit limit.