In order to qualify for a home equity line of credit, you must provide proof of income and proof of ownership. If you use a lender different from the one that holds your mortgage, you have to provide the details of the mortgage. Another appraisal has to be done on your home to determine its current value and for the lender to be able to compute the amount of equity you have.
You have a term in which you can use and reuse the money, usually a 10 or 20 year period and after this, you have fixed payments on the outstanding balance and the interest. There are usually no closing costs associated with this type of loan, but you will probably have to pay an annual fee for the line of credit. The interest rate charged varies from one lender to another, but it is usually just a little above the prime lending rate – provided you have a good credit rating. The interest you pay may be tax deductible, but you will have to consult with a tax advisor to find this out.
You can use a home equity line of credit to pay off your other bills and combine all your debts into one manageable monthly payment or make improvements to your home. You can also use the money to take a vacation, buy a car or a boat or have a nest egg for your retirement. There are many benefits to getting a home equity line of credit instead of a home equity loan. You spend years paying off your mortgage and increasing the value of your home, so why not take advantage of it? Most lenders have online sites where you can apply online and see exactly how much money you qualify for.
Richard Cunningham is a successful entrepreneur and publisher of several profitable websites on Home Equity Line of Credit , Homeowner Insurance , and Apartments for Rent