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When you need some extra money to make a big purchase, renovate your house, or pay off a high interest credit card, a HELOC (home equity line of credit) may be just what you are looking for. Using the equity in your home as collateral, a HELOC is revolving credit. This is an open ended loan that can be paid down or charged up for the a set length of time, similar to a credit card. The interest rate can fluctuate (typically monthly).
In a HELOC, the lending institution approves you for a predetermined amount of credit - the largest sum you can borrow at any one time under the plan. Your credit history, salary, debt and other financial circumstances will affect your credit limit. An appraisal will be required on your house to assess the home's market value. Your home's up-to-date value, subtracted from your remaining mortgage loan balance helps to determine your particular credit limit.