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Answers About Home
Equity
Lines
of
Credit |
Most
consumers already
know how a loan works
– you take out an
application, wait
for approval, and if it comes through,
you borrow a lump sum of cash.
But a home equity line of credit
is slightly different.
Basically, you’re
taking out a special kind of credit card using your home
as collateral. The difference is, you only make
payments on the loan whenever you borrow money on
it.
A home equity line
of credit can be used the same way a home equity loan
can – for vacations, tuition, home improvements – or
anything you want to spend the money on!
It’s calculated
the same way, too. Your loan amount is dependent
upon the amount of equity you’ve earned in your home,
which is the value of your home minus the amount of
money you still owe on the mortgage.
Your home equity
line of credit can have a different repayment schedule
than a home equity loan. Lenders generally give
you a set amount of time to withdraw the
money.
The amount of your
credit line will be dependent upon the amount of equity
you’ve built up in your home. The lender will tell
you the maximum amount of cash that you qualify for –
and then it will be available for you to withdraw as you
need it.
Unlike a lump sum
home equity loan, you may want to take cash out in
smaller chunks. If so, you’ll have to check with
your lender to see if there is a minimum amount of money
you have to take out at each withdrawal. You’ll
usually have to take an initial withdrawal at the time
of closing.
Information contained herein is deemed accurate and correct, but
no warranty is implied or given. Please consult
a financial advisor for specific advice pertaining to
your particular situation. © 2004 Apex Personal
Loans Store. All Rights Reserved.
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