What does it mean Home Equity Line of Credit
There are various types of loans out there that you can take in order to help yourself. With that there are also financial based decisions that can help you through. One such decision that you might want to take includes Home Equity Line of Credit. In this article, we are going to be exploring what Home Equity Line of Credit is meant for.
Home Equity Line of Credit
Basically, Home Equity Line of Credit is often shortened as HELOC. This is basically a method which means that it is a line of credit that is provided to a homeowner. With this line of credit, the homeowner can allow the lender to hold their home as collateral in case of un-fulfilment of terms. The borrowers, for Home Equity Line of Credit, have to be pre-approved by the lenders who can decide their spending limits. These limits are mainly based on the borrower’s credit scores, household income and so on. There are other criteria that are also considered, however they remain at the lender’s discretions. The interest charged with Home Equity Line of Credit method is based on all prevailing prime rates.
Now once the process of Home Equity Line of Credit approved and determined, the homeowner who is the borrower in this case, can then choose a method of repayment as well as the schedule of repayments. The minimum interest rates and payments should be made per month otherwise the borrowers can face troubles. With that the Home Equity Line of Credit term and period can last in between the usual range of five years to twenty years. At the end of this period, the borrower should be able to pay the entire borrowed sum in total if any amount is left.
With Home Equity Line of Credit, you will not have to worry about any closing costs. That means that you have the option of paying only that interest that is applied on the amount that you can actually borrow. For example, if you are allowed to borrow an amount of $100,000, you a uses your income taxes as a way to deduct your interest rates!
So basically, HELOCs are back in the market and as a summary you should note the Home Equity Line of Credit loans are similar to secondary mortgages on your houses. You should remember that this type of financial helps mostly allows you to borrow about 80 percent of your house value! So, you should apply now if you think you can handle the terms, conditions and more!