What is a Home Equity Line of Credit?
Capital One’s home equity line of credit is secured by a mortgage on your home up to the amount of the equity you’ve accumulated. In Louisiana, you may be able to borrow as much as 100% Loan To Value (LTV) of your home based on appraised value and your credit qualifications. In Texas, you may be able to borrow as much as 80% of the combined Loan To Value (LTV), not to exceed 50% of the Fair Market Value of your home.
A “HELOC” is typically a second mortgage that allows you to borrow funds up to a predetermined amount. You can use the line of credit similarly to a credit card by borrowing and paying back the funds. The rates for lines of credit are usually based on the Prime rate. Prime rate is an adjustable rate that is dictated by the Federal Reserve.
A home equity line is a form of revolving credit in which your home serves as collateral. Because the home is likely to be a consumer’s largest asset, many homeowners use their credit lines only for major items such as education, home improvements, or medical bills and not for day-to-day expenses. With a home equity line, you will be approved for a specific amount of credit. Your credit limit is the maximum amount you can borrow at any one time while you have the plan. Many lenders set the credit limit on a home equity line by taking a percentage (say, 75 percent) of the appraised value of the home and subtracting the balance owed on the existing mortgage. For example: Appraisal of home $100,000 Percentage x75% Percentage of appraised value $75,000 Less mortgage debt -$40,000 Potential credit line $35,000 In determining your actual credit line, the lender also will consider your ability to repay, by looking at your income, debts, and other financial obligations, as well as your credit
A home equity line is a form of revolving credit in which your home serves as collateral. Because the home is likely to be a consumer’s largest asset, many homeowners use their credit lines only for major items such as education, home improvements, or medical bills and not for day-to-day expenses. With a home equity line, you will be approved for a specific amount of credit-your credit limit-meaning the maximum amount you can borrow at any one time while you have the plan. Many lenders set the credit limit on a home equity line by taking a percentage (say, 75 percent) of the appraised value of the home and subtracting the balance owed on the existing mortgage. For example: Appraisal of home $100,000 Percentage x75% Percentage of appraised value $75,000 Less mortgage debt -$40,000 Potential credit line $35,000 In determining your actual credit line, the lender also will consider your ability to repay, by looking at your income, debts, and other financial obligations, as well as your cre
Related Questions
- Can consolidating debt through a new, refinanced mortgage, cash-out refinance, home equity loan or home equity line of credit (HELOC) help me cut my monthly expenses?
- What are the chances of interest rates being reduced to allow a refinance on an existing VA mortgage?
- What is a Home Equity Line of Credit?
