How does a home equity line of credit work?

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Home Equity Lines of CreditA home equity line of credit is a form of revolving credit in which your home serves as collateral. Because the home is likely to be a consumer's largest asset, many homeowners use their line of credit only for major items such as education, home improvements, or medical bills and not for day-to-day expenses.
With a home equity line, you will be approved for a specific amount of credit, your credit limit, the maximum amount you may borrow at any one time under the plan. Many lenders set the limit on a home equity line by taking a percentage (say, 75 percent) of the home's appraised value and subtracting from that the balance owed on the existing mortgage.
In determining your actual limit, the lender will also consider your ability to repay, by looking at your income, debts, and other financial obligations as well as your credit history.
Many home equity plans set a fixed period during which you can borrow money, such as 10 years. At the end of this "draw period," you may be allowed to renew the line of credit. If your plan does not allow renewals, you will not be able to borrow additional money once the period has ended. Some plans may call for payment in full of any outstanding balance at the end of the period. Others may allow repayment over a fixed period (the "repayment period"), for example, 10 years.
Once approved for a home equity line of credit, you will most likely be able to borrow up to your limit whenever you want. Typically, you will use special checks to draw on your line. Under some plans, borrowers can use a credit card or other means to draw on the line.
There may be limitations on how you use the line. Some plans may require you to borrow a minimum amount each time you draw on the line (for example, $300) and to keep a minimum amount outstanding. Some plans may also require that you take an initial advance when the line is set up.

In A Nutshell-- Example: You bought your home 11 years ago-- so far you have paid a total amount of $56,000 toward the contract loan amount given to you by your initial bank-- You now have $56,000 in Built-UP equity that you can borrow against-- from either the same bank that gave you the initial loan to purchase the home in the first place or from another different bank. You have an invested $56,000 in the home and the bank knows that you will not want to falter and take the chance on losing the home after you have already put soo much money into it. An so if you want to take out a loan from the same bank or a different bank they will most likely welcome you and issue you a Home Equity Line of Credit Loan as long as you Promise BY Contract that if they give you a loan against your built-up equity you will give up your investment portion of the home if you falter on the payments. If you do this with your initial bank the bank could give you an extended mortgage contract against your first mortgage contract making your payments slightly higher and adding more time for you to pay the amount owed-- if you do this using a second bank you will likely be be faced with a second mortgage.

I ACCEPT CONSTRUCTIVE CRITICIZM -- Please feel free to add to thisinformatin
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Can you get a home equity line without revolving credit?

Home equity line is a line of revolving credit with an adjustableinterest rate whereas a home equity loan is a one time lump-sumloan, often with a fixed interest rate. Home equity loans come intwo types: closed end and open end. Both are usually referred to assecond mortgages, because they are secur (MORE)

Should you get a second mortgage or a home equity line of credit?

Mortgage loans and home equity loans are two different types ofloans you can take out on your home. A first mortgage is theoriginal loan that you take out to purchase your home. Secondmortgage means cover a part of buying of your home or to cash outsome of the equity of your home. It is important to (MORE)

Can you get a home equity loan or line of credit on a cooperative apartment?

Yes, you can obtain a home equity loan or line of credit through the Bank of New York. They also offer mortgage loans on cooperatives. Yes, you can obtain a home equity loan or a line of credit on co-ops through the Bank of NY. It's true that Bank of New York offers home equity loans or lines o (MORE)

How is a home equity line of credit determined?

Answer . \nThe Loan to Value LTV. [ Total loan amount of the 1st and your proposed 2nd as a percentage of the appraised value ].\n. \nYour credit score is the most importaint depending if you are Full documentation or Stated income.\n. \n720 and above would be great middle credit score.\n. \nI (MORE)

Is the interest on a home equity line of credit tax deductible?

Tax Deductable . \nThe beauty of a Home Equity Loan or Line of Credit is that interest paid is usually tax deductible* AND you can use the money for any purpose YOU choose - home improvements, consolidate debts, college education, vehicle purchase, or vacations.

How does an equity line of credit work?

Answer . \nit lets you borrow against the equity [the amount house worth minus the amount still owed on it]. go to the bank where you bank & they will tell you exactly the amount of credit you are eligible to take [or borrow] against your home equity. if your credit is good they will tell an exa (MORE)

Do you have to pay taxes on a home equity line of credit?

Answer . \nPresumably your speaking of federal income taxes?\n. \nGetting a loan, secured by property or not, are never a taxable event. (Not paying it off can be).\n. \nWhen you sell a home, you MAY be taxable on the gain on sale although there are many exclusions available for this too. (T (MORE)

What happens to home equity line of credit at death?

The loan will come due in full immediately if it is not a joint loan. If there is another person at the home, say a wife of a deceased husband who had the line in his name alone, they will have to be approved for a loan of their own. You cannot have a loan on property that was approved with another (MORE)

Calculating interest on a home equity line of credit?

Multiply the interest rate (Prime +/- a predetermined margin) by the loan amount and divide by 12 to establish the monthly payment.. Example:. 80,000 x 8.25% (Current Prime Rate) = $6,600 $6,600/12 = $550 per month

What happens when your home is in foreclosure and you have an equity line of credit on this home?

The line of credit is no longer usable and the bank that gave you the line of equity will be asking you to pay the balance. The mortgage holder will also be asking for the deficiency after the foreclosure auction. Alternatively, the banks may send you a 1099 early next year so you will owe taxes on (MORE)

Who do i get my home equity line of credit from and what does home equity line of credit mean?

A Home Equity Line Of Credit (HELOC) is generally granted by a bank or credit union. Equity is the amount of your home that you actually own. For example, if your home is worth $100,000 and you have paid $20,000 in principal, your equity is $20,000. A loan can be made using this equity as collateral (MORE)

Are rates fixed on home equity lines of credit?

The majority of HELOC loans still have a variable rate. They may be tied to either the LIBOR or Prime index. Many lender will have an option that allows you to convert the rate to a fixed rate loan. Also, you may be able to find a lender in your area that will allow a fixed rate option from the begi (MORE)

What is bestHome equity line of credit or home equity loan?

It depends on your goal. A home equity loan has the benefit of a fixed rate and payment, but you can not re-use the funds as they are paid back, and you pay interest on the whole amount borrowed. A HELOC allows you to draw money over time (for things like a long-term remodel, college fees, or emerge (MORE)

Can you get a home equity line of credit with instant equity as collateral?

No. Any home equity line uses the underlying property as collateral. A home equity line will only be extended if the following are all true: * The valuation of the home suggests that there is equity left over after meeting the obligations of the primary/first mortgage * There is not already a (MORE)

Can you get a home equity line of credit to buy a home?

No. You must apply for a purchase money mortgage if you do not already own any home. If you already own a property and have enough equity in that property , you can take a home equity loan on that property and use those proceeds to purchase another property. No. You must apply for a purchase mon (MORE)

What banks offer a home equity line of credit?

A home equity line of credit is found at nearly every bank and credit union. New England Bank, Peoples Bank, Bank of Niagara and just about all your local owned banks are good sources of this kind of loan.

Can you refinance your house after getting a home equity line of credit?

Technically, yes, but the home equity line of credit is a lien against your home and will have to be paid off when you refinance the house. In reality, many people find that the unpaid balance on the HELOC, plus the unpaid balance on the original mortgage, exceeds the amount the bank will lend on th (MORE)

What is the difference between a Home Equity Line of Credit and a Home Equity Loan?

The difference between a home equity loan and a home equity line of credit is spelled out in the term. Home Equity refers to your equity in your home. Therefore, a Home Equity Loan is a mortgage in which the bank lends you money against your equity in your home, to the extent of its value. W (MORE)

Can you take out a home equity line of credit with a cosigner?

Yes, as long as the co-signer is fully informed that if you stop paying the loan they will be fully responsible for paying it and thereby, paying for property they do not own. Yes, as long as the co-signer is fully informed that if you stop paying the loan they will be fully responsible for pay (MORE)

What is the definition of a home equity line of credit?

A home equity line of credit, often abbreviated as HELOC, is a credit line which is backed up by a second mortgage on the home. The credit is available to the borrower at any time via a check or debit card. Anytime the homeowner spends money from that credit line, that amount becomes part of the b (MORE)

Which banks have favorable home equity lines of credit rates?

There are many banks that offer home equity lines of credit. Most banks base your line of credit based on one's credit score and total amount of equity in assets and employment. Some good examples are RBC, ScotiaBank, Bank of America, BMO, and TD Canada Trust.

How does one apply for a Chase home equity line of credit?

One may apply for a Chase home equity line of credit loan via the Chase credit website. A Chase home equity line of credit allows one to use their home as collateral for a variable-rate line of credit that can be used for a variety of purposes.

Where can one find the best home equity line of credit?

One may find the home equity line of credit depending on what most suits them. While some are concerned about service others are more drawn to the cost. However some of the most recommended home equity lines of credit include, 'Zillow' and 'TD Bank'.

Where might one go to learn how a home equity line of credit works?

When looking to find out about how a home equity line of credit works there are sites such as California real estate finance (as one word), that explains the system around it. There are also other sites such as consumer finance (no spaces), which also explains all of the in and out possibilities of (MORE)

What is fixed rate home equity line of credit?

Home equity credit allows funds to be drawn against the value of the home. Fixed rate loans ensure that the repayable value will not increase for a fixed term, so protecting against interest rate rises.

What is the interest rate for home equity line of credit loans?

Getting information on an interest rate for a home equity line of credit loans will probably vary depending on the city you live in. Some cities are cheaper to live in than others. Your friendly local real estate should be able to help you depending on your income status.

How can one acquire a home equity line of credit loan?

To apply for a home equity line of credit, one should contact the institution they do their banking from. This way, there is already a business relationship established. The line of credit will vary based on credit score and how much equity is owned.

Which is better a line of credit or a home equity loan?

Which is better will depend on the customer and their financial situation. A home equity loan is usually better for those with a specific, short-term project with a defined cost. A line of credit may be better for those with multiple projects and unknown costs.

What are the advantages of having a Wachovia home equity line of credits?

Wachovia was recently absorbed by Wells Fargo Bank, but Wells Fargo does offer Home Equity Lines of Credit. A Home Equity LOC from Wells Fargo is advantageous over other options such as personal loans or credit cards because it offers a lower interest rate, and may be tax deductible depending on yo (MORE)

How can a home equity line of credit be used to refinance a loan?

Home equity line of credit is often used to provide funding for on going expenses such as repairs and replacements that are a necessity.Refinancing is a tricky business and advice should only be sought from qualified and experience finance professionals. It's advisable to speak to your personal ban (MORE)