March 24, 2010

Often referred to as a HELOC  (Home Equity Line of Credit).  Instead of trying to define a HELOC I refer you to Wikipedia.  www.wikipedia.com     It offers a pretty clear definition.  I simply want to clarify for the homeowner a few issues.  A lender who offers you a HELOC is going to place a lien against your property.  If you already have a mortgage the HELOC will become a 2nd lien.  In today’s market most lenders who offer HELOCs will not approve the loan unless the combined loans (your 1st mortgage balance and the HELOC loan amount) do NOT exceed 85% of the value of the home.  If your home value is $100,000.00 then 85% would equal $85,000.  If your 1st mortgage balance is $65,000 it may be possible to be approved for a home equity line of credit of $20,000.00.  Some lenders will only offer HELOCs up to 80% of the value.  You should perform your “due diligence” here and shop around for a lender’s CLT limits for HELOCs  (combined loan to value). 

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