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home equity line
home equity loan
home improvements
financial obligations
medical bills
credit history
10 years
Home Equity Line Of Credit
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A home equity loan line of credit is a type of revolving credit whereby your house serves as collateral. Due to the fact that a home is a consumer's valuable asset, a number of home owners use home equity loan line of credit for major things like home improvements, education and even medical bills, instead of using them for day to day expenses.

With a home equity loan line of credit, you will be considered for a specific amount of credit. It is usual to find out that lenders set the credit limit on home equity loan line of credit as they take a certain percentage, about 75%, of the home's appraised value and subtracting from that the balance you owe on the current mortgage.

In order to know your exact credit limit, the lender will also put in mind your ability to repay the amount of the loan (I mean both the principal and interest), as they look at indicators such as your income, debts, your credit history as well as your other financial obligations.

In addition, many home equity loan line of credit plans set a fixed period by which you can borrow money, for instance up to a decade. At the end of this "draw period", you can be given the chance to renew your home equity loan line of credit. But if your plan does not give room for renewals, you will be unable to borrow more money once the period expires.

On the other hand, some plans may call for full payments of any outstanding balance at the end of the period. There are as well others who can allow repayment over a fixed period of about 10 years. Once you are approved for a home equity loan line of credit, you will be allowed to borrow up to your credit limit at a time you choose. It is usual that you use special checks to draw on your home equity loan line of credit.

Other limitations also exist as well. With some plans, you can borrow a minimum amount every time you draw on home equity loan line of credit or keep your minimum amount outstanding. With some plans, you may be required to take an initial advance why you set up a home equity loan line of credit.

If you are ready to apply for a home equity loan line of credit, look out for the plan that best suits your actual needs. Be sure to read the credit agreement carefully, and note the terms and conditions of various plans. In addition, be sure to note the Annual Percentage Rate (APR) as well as the costs that establish the plan. Do not forget that, the APR for a home equity loan line of credit is footed on the interest rate alone, and as such will not show closing costs and other fees. So, you need to compare these costs as well as APRs among lenders.

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