What Is A Home Equity Line of Credit?

Home Equity Line of Credit - HELOC 

A line of credit that uses the borrower's home as collateral. The borrower may borrow from the line of credit and within a certain call period. See Mortgage Loan Terms Glossary

How Does A Home Equity Line of Credit Work?

Juan spent much of his time pondering how to make a profit from his ideas, inventions and business savvy.  The only thing holding him back was money.  As a long time homeowner he appreciates the importance of saving funds for unexpected emergencies and refuses to touch his savings. 

He does not want to risk his relationship with friends and family by asking them for money.   After doing some research on the Internet John stumbles upon an article that lists his alternatives for finding funds. 

1. Small Business Loan
2. Government Grant
3. Investor Funding
4. Home Equity Line of Credit

Juan feels comfortable with the home equity line of credit program.  He likes the advantage of flexibility. He can access money repeatedly and in varying amounts, as needed.

He also likes the fact that once the account is open, it operates like a credit card in terms of annual fees. If business revenue comes in slower than anticipated the equity line can carry him through the tough times of business upstart.  

Juan also noted that a home equity line of credit generally carries a lower rate than a home equity loan, and will often have a low introductory rate for a certain period of time. For Juan the home equity line of credit seems the way to go about starting up his new business venture.

Home Is Where The Equity Line Is

A home equity loan and HELOC uses the equity in ones home as collateral and therefore create a lien against the borrower's house. The uses of home equity loans include financing major home repairs, medical bills or college educations. 

Most but certainly not all home equity loans programs require good credit history, and reasonable loan-to-value and combined loan-to-value ratios. 

Both home equity loans and HELOC are usually referred to as a traditional mortgages. Home equity loans are considered second mortgages, because they are secured against the value of the property.  Still home equity loans and lines of credit usually have a shorter term than first mortgages. It is sometimes possible to deduct home equity loan interest on one's personal income taxes. Home equity loans can be closed end and open end mortgages.

Looking for free rate quotes on home equity loans? 
Search for a lower loan amount with payments you can live with. Shop for a lower rate. Beware of balloon payment programs where you pay only interest during the duration of the loan term and one lump sum payment, the principle, at the end of the term. Carefully examine the various loan programs offered and don't be afraid to ask questions. 

• Lower your monthly payments
• Reduce current interest rate
• Get cash back
• Save thousands over life of the loan
• Free home mortgage rate quotes
• Several lenders one application
• Competitive mortgage rates  

Compare rates on second mortgages, home equity loans, and line of credit rates. Compare rates offered by scores of lenders to find the lowest home equity loan rates available in minutes. The online mortgage loan marketplace connects you to a network of home loan lenders who compete for your business offering some of the lowest most competitive rates on home equity loans.

Steps To Apply For A Home Equity Loan

1. Select Your Loan Type
Choose Home Equity loans

2. Complete Loan Application
Upon completion of application you will be connected to up to four lenders matching your financial profile

3. Compare Home Equity Loan Rates
Requesting free no obligation mortgage rate quotes lender contact. Compare rates and choose the most attractive rates offered.