Equity Line of Credit

The standard home equity credit line is different than an equity loan. An equity loan is a lump-sum loan secured by your house. An equity line of credit is a revolving line of credit. A borrower is approved for a specific amount of credit, which will become the maximum amount that can be borrowed under the plan. Lenders usually require the line to be a minimum of $500, but total credit lines can range up to $500,000.

Once the home equity line is in place, a borrower can borrow up to the credit limit at any time. Many plans require a minimum draw against the line of between $250 and $500. The borrower is usually required to repay at least the minimum interest due each month for the first 10 years. The interest rate on home equity lines is variable, is based on the prime rate and is capped at a maximum that ranges from 15 to 20 percent.

Click the link to learn more about the various types of mortgages or to apply for an equity line of credit.