How Do You Calculate Home Equity Line Of Credit Interest?
You may already have a home equity line of credit (HELOC), or are considering opening one with your bank or credit union. A HELOC is a popular way of tapping the equity in a home to pay for college tuition or other large expenses. Home equity line of credit interest rates are low relative to other types of borrowing because your home is used as collateral. In addition, you only borrow funds as you need them so you aren’t paying interest on a big lump sum as you must with a conventional home equity or personal loan. Understand how home equity line of credit interest works. Like credit cards you increase your balance each time you use the HELOC to make a purchase. Interest charges are based on annual simple interest percentage rate. The balance is totaled each month and the interest calculated and added to the principal. Find the periodic interest rate for a single month by dividing the annual percentage rate by 12. For example, if your annual percentage rate is 9.0 percent the periodic
