Frequently Asked Questions about a Home Equity Line of Credit

Here are the answers to the most commonly asked questions about home equity lines of credit.

What is a home equity line of credit?

A home equity line of credit is a loan that extends you a line of revolving credit using your home as collateral. A home equity line of credit works much like a credit card but can offer much lower interest rates. When you apply for a home equity line of credit, your lender will approve you for a credit limit that you can access whenever you need. You usually do so by using special checks that your lender provides.

How do I sign up for quotes on a home equity line of credit?

You can sign up for quotes on a home equity line of credit by filling out our simple, online form. The form will ask you for your name, address, and other basic contact information. Once we have that, we will supply you with at least four free quotes on a home equity line of credit. You can then apply for the loan of your choice on the lender’s website or you can save your quotes and return to our site at your convenience.

How do payments work on a home equity line of credit?

The payments on a home equity line of credit work much like those on a credit card. You will have minimum monthly payments that you will have to make during your draw period, which is the period of 10-20 years during which you can access your funds. The minimum monthly payments could be as low as interest only. Once this period expires, you will enter a fixed period where you will need to pay a certain amount each month on the balance and the interest. Some home equity credit lines require you to pay the loan in full in a lump-sum after the draw period if you have not paid the balance off prior to that time.

How large of a home equity line of credit can I get?

The size of your credit limit on a home equity line will depend on the amount of the equity in your home and your lender. Most lenders will extend you a home equity line of credit up to 100% of the equity in your home. Some lenders will even give you up to 125% of the equity of your home. The equity of your home is determined by taking the appraised value of your home and subtracting any outstanding debts against it.