Home Equity Lines of Credit - the Basics

A Home equity line of credit is a loan which is similar to a credit card. These often have a very low interest rate (In most cases even lower than home equity loans). A Home equity lines of credit acts as a form of revolving which your home equity services.

For example,

-You take out a Home Equity Line of credit for $10,000

-You purchase a car for $8,000 with your revolving line of credit.

-You can now only withdrawn $2,000 until you can pay back the $8,000 to increase your limit to $10,000.

*Some lenders might have a minimum withdrawal amount.

There are many types of payment plans a lender may choose to offer you. You will pay interest on what you owe. However once the loan term ends, usually around 10 years, you must pay back the balance owed. If you were to take out an interest only loan, this will be you. If you decide to pay some principal in your repayments you can avoid this. You must pay off the loan when you sell your house even before the loan term ends.

How much can I borrow?

Usually if the amount you wish to borrow is above $25,000, with both loans you can usually borrow up to 80% of what your house's market value minus what you owe. For example if your house is worth $200,000 and you still have a mortgage of $100,000 to pay off, you would use the following calculation:

$200,000 * 0.8 = $160,000

$160,000 - $100,000 = $60,000

You can borrow up to $60,000 dollars in theory. The lender will take other factors into account such as your ability to repay the loan. This will be determined by your income, other financial obligations, debt, and previous credit history.

If you want to borrow below $25,000 you can usually get the loan if you have $25,000 in equity.

Fees:

An Appraisal fee. An independent valuation of what your house is worth is needed to establish how much equity you have in your house. Usually around $200USD.

An application cost. This may not be refunded if your request for credit is denied. May also include property appraisal costs and credit report costs.

Closure costs which may include fees for attorneys, mortgage preparation, and filing property, title insurance, and taxes.

You may also have to pay transaction fees for every time you withdrawn money from your line of credit and possibly an annual membership fee.

This article is owned by http://www.use-your-equity.com and written by John Whiteside. Learn more about real estate investing, and how to create and use the equity in your home! The original article can be found at http://www.use-your-equity.com/heloc.html

---

Benefits of a Remortgage

There are many benefits in choosing a remortgage, some of... Read More

What Exactly is a Mortgage Broker and How Can He/She Help You Save Thousands on Your Mortgage?

Have you ever heard of a mortgage broker before? If... Read More

How to Get Your Home Mortgage Loan

If you are thinking of purchasing a new home soon... Read More

Home Equity Line of Credit ? Great for Remodeling Projects

Many homeowners are lucky enough to find a house that... Read More

Mortgage Loans Explained In Plain English

With the many different kinds of mortgage loans out there,... Read More

Before You Buy

Before you start looking for a home, figure out what... Read More

Buy a Home With a Government Grant? Avoid this Scam

If you watch enough late night television, you'll see advertisements... Read More

Buying A Home? Reasons to Consider Financing Your New Home Loan Online

Financing your new home loan online can save you time... Read More

How Much Interest is Your Home Equity Earning?

How much interest are you earning on your home equity?... Read More

HELOCs and Second Mortgages: Which One Should I Choose?

Whether you need some extra cash to pay off some... Read More

Mortgage: Rehabilitation Of Financial Helplessness

The term 'mortgage' is assumed really controversial by people when... Read More

What is an Offset Mortgage?

An offset mortgage is very similar to a current account... Read More

What Are Home Equity Loans?

A home equity loan is simply borrowing on the difference... Read More

Looking for a Bad Credit Home Improvement Loan

To make needed repairs to your home without the advantage... Read More

Applying for a Home Mortgage Loan Online - The Pros and Cons

If you have considered applying for a home loan mortgage... Read More

How to Get the Best Mortgage

This is a guide on how to get the best... Read More

Mortgage Information

A mortgage is borrowing money using property as a security,... Read More

Reverse Mortgages ? A Tax Free Income For Senior Citizens

I fully realize if it sounds too good to be... Read More

Home Loans For People With Bad Credit - Tips To Getting Approved Online

Buying a home with bad credit doesn't have to stop... Read More

Refinancing Your Home Mortgage Loan

You're considering refinancing your home mortgage loan to save money.... Read More

Home Equity Lines of Credit Vs. Other Conventional Loans

When it comes to getting money, you have two basic... Read More

UK Mortages: A Guide Through The Maze

Types of UK MortgagesYou may be wasting your money with... Read More

Refinancing Your Home Mortgage Loan With Bad Credit

There are numerous reasons a person has bad credit. Late... Read More

Home Equity Loans

A home equity loan allows you to cash-in on the... Read More

Remortgages Guide

Outlined below is a useful remortgages guide. Remortgaging has become... Read More

The Best Tactics for Getting a Quick Homeowner Loan

Trying to find a quick homeowner loan can seem difficult... Read More

Essence of Self Certified Mortgages

Your search for a mortgage isn't leading results.Check for any... Read More

Know Your Mortgage Fees, and Youll Never Pay Too Much for Your Loan

If you buy new windows, you'll not only pay for... Read More

Remortgage To Release Equity By Improving Interest Rate

You have been paying on your mortgage for quite sometime... Read More

Are Biweekly Mortgages Really Worthwhile?

You may have heard people, especially mortgage lenders, extolling the... Read More

How to Get Cheap Home Loans with a Bad Credit

It's been years since you made any major improvements to... Read More

When is the Right Time to Refinance Your Mortgage?

You've heard that interest rates are down and you think... Read More

What Exactly Is A Reverse Mortgage And How Does It Work?

A reverse mortgage is a certain loan that allows the... Read More