Credit lines are a definitive amount of credit that can be extended to an individual borrower. An individual home equity line of credit will depend on an analysis of an individual’s finances on the part of a financial institution. The individual will be required to present current household income, debts, expenses, and other aspects detailing the individual’s financial state of affairs. A general line of credit illustrates the amount of monies that are advanced to an individual.
What is a Home Equity Line of Credit (HELOC)?
A home equity line of credit is classified as a line of credit that is determined by the current state of an individual’s home equity, which is defined as the difference between the amount of money outstanding with regard to a home loan and the amount of money at which the home is valued. A home equity line of creditis allowed to homeowner borrowers with regard to the amount of home equity in their respective possession.
Assessing a Home Equity Line of Credit
Home equity line of credit costs, fees, and rates are contingent on the current financial state of affairs experienced by the potential homeowner borrower, which can include:
• Fees accrued from property valuation and appraisal
• Fees incurred as a result of processing, which can exist in tandem with the initial application fees
• Fees incurred as a result of closing and/or showing costs
Home Equity Line of Credit Interest Rates
Although interest rates involved in the assessment of a home equity line of credit vary, the most common types of interest rates include fixed or variable interest rates. Once an individual is approved for a loan that is contingent upon their respective home equity line of credit, the financial institution will determine the interest rate that will be utilized; however, depending on the payment plan and rate of payment, interest rates can be subject to change at the discretion of the financial institution.
Terms of Home Equity Lines of Credit
Although the awarding of a loan in conjunction with a home equity line of credit can be a helpful prospect, the failure to satisfy a loan or mortgage can be detrimental for the financial state of an individual or business. The following terms of home equity line of credit-based loans are encouraged for consideration:
• Property with outstanding loans cannot be owned or sold by the borrower until the satisfaction of the loan
• Unsecured loans require the borrower to repay the loan by any legal means necessary to do so; this includes foreclosure, liquidation, and/or bankruptcy
Home Equity Line of Credit Legality
The parameters and protocols surrounding both the assessment and determination process of home equity line of credit vary on an individual basis and in conjunction with the borrower’s respective state of affairs with regard to their individual home equity line of credit; in the event that an individual experiences difficulty completing – or understanding – the factors involved in determining a home equity line of credit , they are encouraged to consult an attorney specializing in real estate, property, finance, business, and credit card laws.