Home Equity Line of Credit
What is a home equity line of credit?
An equity line of credit is a popular form of revolving credit in which your home is used as collateral. In most cases, credit lines are second mortgages, but every now and then, they will be in first position on title. Equity lines of credit are considered open-end mortgages and have a variable interest rate and a draw period.
What is a draw period?
The draw period is the initial specified period which you are enabled to use the credit available on your equity line. After the draw period, the remaining balance is amortized for the repayment period.
How much can I borrow?
Your credit limit is determined by taking a percentage of your homes' appraised value and subtracting the balances of any outstanding mortgages on the property. The maximum line of credit at this time is $500,000. If you qualify, the minimum home equity line is $10,000. The two major factors to determine the amount would be the "Combined Loan to Value" and the "Fic0 Score" as determined by Trans Union, Experian and Equifax.
How do I use my equity line of credit?
Shortly after your loan funds, you will receive a book of checks that will allow you to start using your credit line. Check with applicable lenders in regards to annual fees, as some lenders may charge a nominal fee. Remember to compare "apples to apples", when considering home equity line loans as rates, closing costs, annual fees and more must be disclosed in the Good Faith Estimate.
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