A Brief about how to get Home Equity Line of Credit.

A home equity line of credit in short known as a HELOC is a revolving line of credit, much like a credit card. You can borrow as much as you need, any time you need it, by writing a check or using a credit card connected to the account. You may not exceed your credit limit. Because a HELOC is a line of credit, you make payments only on the amount you actually borrow, not the full amount available. HELOCs also may give you certain tax advantages unavailable with some kinds of loans. Talk to an accountant or tax adviser for details.

You should find out if your home equity plan sets a fixed time a draw period when you can withdraw money from your account. Once the draw period expires, you may be able to renew your credit line. If you can’t, you won’t be able to borrow additional funds. In some plans, you may have to pay the outstanding balance. In others, you may be able to repay the balance over a fixed time.

At the end of the fixed-rate advance (FRA) term, any unpaid FRA balance reverts to the line of credit and charged the variable rate in effect on the home equity line of credit at that time. Unless you’ve reduced your balance, the variable interest rate may significantly change your monthly payment.

If you choose a variable-interest rate for your line of credit balance, your monthly payments may increase or decrease as interest rates fluctuate. You can convert any or all of your outstanding variable-rate line of credit balance, up to $250,000, to a fixed-rate advance with a variety of terms.

A home equity loan is basically a second loan (after your mortgage) that you take out on your house. But where the first loan (your mortgage) goes toward the purchase of your home, the second loan (the home equity loan) is a lump of cash the bank gives you to spend as you please.

Most home-equity loans and HELOCs use the following formula to determine how much to lend: 75-80% of current home’s value (determined by an appraiser’s visit, which you pay for) minus the amount you owe on your mortgage. When real estate values decline, getting a HELOC gets tougher, but it’s still an option for many homeowners.

You may be able to borrow against the equity in your home to finance other needs such as a home renovation, debt consolidation, college tuition and more. You can generally borrow up to 80% of the appraised value of your house.