Pittsfield, MA -- (SBWIRE) -- 05/16/2013 -- Real-estate-yogi.com is here to share its knowledge of this subject by offering some suggestions, such as:
- Understanding How HELOC Works
- Why HELOC is Different
- Where to Apply
- Comparing HELOC Interest Rates
A HELOC is a loan against one’s home equity, but it works like a credit card. If one has ever wondered, “How much home equity line of credit can I get?” here’s his answer: He can borrow as much money as his home has equity. If he’s owned the home for a few years, he may not be able to get a HELOC because his house has not yet developed any equity. If he’s had the home for many years, he’ll be able to use its equity for a HELOC.
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What Makes a HELOC Different
The major difference between a HELOC and a traditional loan is, with a regular loan, the money is given in one lump sum, and a HELOC’s is disbursed over time. One of the home equity line of credit rules is that the money can only be accessed within the “draw” period, usually 5 – 25 years. A second difference between a HELOC and a conventional loan is that the interest rate for the HELOC is variable, whereas most regular loans carry a fixed rate.
How and Where to Apply
A person can apply for a home equity line of credit at any lending institution. It’s always wisest to fill out an application with the lender that drew up one’s mortgage, as that is the one most likely to agree to the HELOC. If, however, one can find a better interest rate at another lender, by all means, go there. There are also financing companies that are not affiliated with any bank, and one might be able to obtain a HELOC there.
Check Competitive Rates
While the interest rates on a HELOC are variable, they can differ from one lender to the next. This is why one should compare the rates on a home equity line of credit. As with any loan, the lower the interest rate, the lower the payment is, so put some time into checking out several lenders’ rates before choosing one.
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