Questions about Home Equity

What is a home equity line of credit?
A home equity line of credit is a form of revolving credit in which your home is used as collateral. Home equity lines of credit feature a variable interest rate and a draw period.

What is a draw period?
The draw period is the time frame during which you are allowed to use the credit available on your home equity line. When you borrow funds from your line of credit it is referred to as a draw.

How much can I borrow?
Your credit limit (also known as available equity) is determined by taking a percentage of your home's appraised or fair market value (to be determined when your application is received), and subtracting the balances of any outstanding mortgages on the property. If you qualify, the minimum home equity line is $20,000 and home equity fixed loan is $15,000

What is the difference between a home equity loan and a home equity line of credit?
While both are considered second mortgages, with a home equity loan all funds will be paid at closing. A home equity line of credit provides you with a credit line that you can borrow against at any time within a set time limit and up to a maximum amount.

What is my maximum loan/line amount?
Your maximum loan/line amount is determined by a number of factors. In most cases your total mortgages, including your requested loan / line amount, can add up to 80% and in many cases even 100% of your home's value.

What percentage of my home's appraised value can I borrow?
The amount that you can borrow varies based on a variety of factors. However, most borrowers can borrow at least 80% of their home's value (when all mortgages are totaled) and some can borrow up to 107%.