What Is HELOC and How Does It Work: Your Guide

What is HELOC and How does it work

If you are new to the idea of getting a loan and learning about how to apply for them, then you should first understand the various types of loans that are available for application. With that, you will find out how each type is beneficial, the downfalls and the credit limits of each loan alternative out there. Here we will introduce HELOC to you and help you figure out what is HELOC and how does it work.

What is HELOC and How does it work?

To understand what is HELOC and how does it work, you must first know what HELOC stands for. HELOC is an acronym that means Home Equity Line of Credit. HELOC is a personal loan which is simply called home equity line. This loan is often called a second mortgage. Your first mortgage is the mortgage you have to pay for owning your house. Basically, when you use HELOC you are substituting your first mortgage to save a large sum of money in a short term. In order to reveal more about the HELOC program, we are going to divide what is HELOC and how does it work into two parts. Part one of what is HELOC and how does it work has been taken care of, let’s move on.

What is HELOC and How does it work

Part Two: What is HELOC and how does it work?

We have answered what HELOC is but how does HELOC function? You should be glad to know that this personal loan is not fixed. That means that if you wish, for example, to borrow more than $150,000 your lender allows you to extend your amount. With that you can also increase the time of your loan but your return rate can remain fixed. You get to draw the line by using a credit card, writing a check or so on. These can be risky but they are easier to process. HELOCs have their draw periods. These draw periods can stay between five to ten years just for interest. The repayment of loan can last for ten to twenty years. Some lender however, do not follow this trend and wish to be repaid within the draw period.

What is HELOC and How does it work

Hopefully, you have understood what is HELOC and how does it work with us!

How to Use the Home Line of Credit Calculator for Your Benefit?

How to Use the Home Line of Credit Calculator for Your Benefit?

There are various types of loans that you can receive from your local bank. Mainly, loans are based on your financial security. That means loans are only issued to you if you bank is ensured that you can pay the issued amount on time with the assigned interest. But, if you are someone who is unable to get a loan based on your credit situation, you can refer to home line of credit and use the home line of credit calculator to estimate just how much finances you will be lent.

Home Line of Credit

Home Line of Credit is more specifically known as a second mortgage because this type of loan is secured by the property you own. Unlike your first home mortgages, however, these last for a shorter term period (Five to fifteen years maximum). Home Line of credit is functional similar to a credit card. You can borrow a certain amount for a time limit set by the creditor. And within the period, you pay back the borrowed amount with a set principal. In order to find out how much credit your property can provide you in loan, you can use a fixed home line of credit calculator.

How to use the Home Line of Credit Calculator?

The home line of credit calculator allows you to determine how much you can borrow according to the value bases of your property. To get an estimate with home line of credit calculator then, you must have the following information:

  • The value of your house
  • The amount you owe on home
  • Type of residence
  • Your property ZIP code
  • The amount of line of credit you desire
  • The amount you need right now

These six specifications will be entered into the home line of credit calculator, that you can visit on Bank of America’s website, to get an estimate. You can click here to use the home line of credit calculator yourself. Otherwise, contact Bank of America at 1-800-763-1392.