The easiest way to do describe a home equity line of credit is to break the term into 2 parts. The first part is Home Equity. Home Equity is defined by what your house is worth- less what you owe on your house. A simpler way to understand home equity would be to ask, “If I sold my house today, how much cash would I have left after I’ve paid what I owe on it?”
The second part of the term is Line of Credit. A line of credit is like a revolving credit card. You can borrow up to a fixed amount and pay it back in monthly installments. You can pay it down and borrow off of it as many times as you would like over a given amount of time.
Combining the two terms, a Home Equity Line of Credit is a type of loan that you can advance off of and use that is secured by the equity you have in your home. The dollar limit is determined by the amount of equity you have in your home. The HELOC (Home Equity Line of Credit) is a popular product in banking. There are many situations that consumers face where a HELOC comes in helpful. The HELOC gives homeowners access to use the equity in their home, saves time when borrowing needs arise, and the interest may be tax deductible. Contact Citizens State Bank today to learn more!
Brett Streicher - Strawberry Point Branch
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