Home Equity Line Of Credit - Information and Advice

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What is a home equity line of credit?

A home equity line of credit is a form of revolving credit in which your home is used as collateral. Lenders offering home equity lines of credit often feature a variable interest rate and a draw period.

The draw period is the time frame during which you are allowed to use the credit available on your home equity line. When you borrow funds from your home equity line of credit, it is referred to as a draw.

The minimum initial draw amount on a home equity line of credit is usually $10,000 to $20,000. The minimum amount for subsequent draws is often $500 or more.

Within six to eight weeks of your loan closing you will receive a package that contains both payment information and checks that will allow you to access your line of credit.

While both are considered second mortgages, with a home equity loan all funds will be paid at closing. A home equity line of credit provides you with a credit line that you can borrow against at any time within a set time limit and up to a maximum amount.

In most cases the interest on your home equity line of credit is deductible as long as your home equity debt is $100,000 or less and the total debt on your home is less than or equal to your home's appraised value. Any mortgage debt above your home's appraised value may not be tax deductible.

Home Loans Help also provides resources and tools for finding the lowest rates on home equity loans, checking current mortgage rates, or calculating your potential borrowing power under a new home equity line of credit. 

Click here to check online at E-Loan for current home equity line of credit rates.

Click here for a complete list of articles, tips, and tools for home equity lines.
 

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