Home Equity Line Of Credit

How A HELOC Works

A HELOC has a predetermined period on which you can capitalize on the agreed up amount of credit the equity in your homes is worth. During this time frame, you can choose to draw upon part or all of the line of credit in as many separate transactions as desired. Depending on the lending institution you have agreed to terms with, there may be associated fees with each transaction so there may be times when it is better to plan and only make a single withdrawal from the total value. There is also a specified term in which the money must be paid back. The length of this payback term is usually determined by the amount of the equity used. Although you may have a longer period to pay back a larger sum of money, the associated interest rate can also be higher as well. While a HELOC is still a great choice for many homeowners, self-funding projects will always be the cheapest option.

Continue reading to learn about qualification requirements.