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A home equity line of credit loan is a type of credit available specifically for homeowners. Home equity line of credit loans afford homeowners a way to use the equity built up in their homes without having to sell the home.
Definition
A home equity line of credit loan is a secondary mortgage loan that allows homeowners to borrow against the equity in their home. The lender determines what percentage of equity may be borrowed against.
Qualifying
To qualify, you will need to provide your lender with proof of income, home ownership, the amount of equity you have in your home, and an appraisal of the home's value.
Repayment Terms
Loans are typically repaid over a fixed term, anywhere from ten to 20 years. You are required to make minimum monthly payments as set forth by the lender.
Cost
You may be charged an annual fee, an application fee, and/or closing costs, depending on the lender's policies.
Interest Rate
The interest rate may be variable, rather than fixed, and lenders must set a limit as to how much your rate may increase over the life of the loan.
Source:
U.S. Department of Veterans Affairs Mortgage Definitions
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