How To

How to Get a Home Equity Line of Credit

Contributor
By eHow Contributing Writer
(4 Ratings)

A home equity line of credit is like a special checking account that taps into the equity in your home, allowing you to make improvements, pay for education, buy a car or whatever you want. And the best thing is, the interest is tax deductible!

Difficulty: Moderately Easy
Instructions

Things You'll Need:

  • Real Estate Brokers
  • Online Mortgage/finance Services
  1. Step 1

    Contact your banking institution. If you are already doing business with this organization, it might be more willing to keep you as a customer.

  2. Step 2

    Contact local banks or savings institutions, which are more likely to do these types of loans.

  3. Step 3

    Contact a local real estate mortgage broker for references of lenders who offer credit lines.

  4. Step 4

    Look for the credit line with the lowest interest rate.

  5. Step 5

    Compare terms. Most credit lines have a "draw period" (the period during which you can write checks and tap into your equity) of 10 years, and an additional repayment period of five years, for a total of 15 years.

  6. Step 6

    Provide the documentation required by the lender. If the lender is a local bank or savings institution - rather than a mortgage lender - the time, fees and documentation required to complete the transaction may be significantly reduced.

Tips & Warnings
  • Typical lines of credit require a minimum monthly payment of 1 percent of the used portion of the loan.
  • If you don't use the money in your credit line, you don't pay on it. You only pay interest when you actually use the money.
  • A line of credit is secured by your home. Failure to repay could result in foreclosure and losing your home.
  • Protect your checks! The checks that the lender provides you draw money directly from your equity.

Comments  

bsherrod said

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on 8/2/2009 Great Article, I think that in todays economic environment people need more aggressive opportunities to become homeowners. I was able to get a loan through a private source that few people are aware of. I had some serious credit problems at the time, but was still able to borrow the money that I needed to buy a home. I went to http://budurl.com/notapaydayloan and I got the information that I needed to borrow the money.

Willbastar said

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on 5/22/2007 I got a home equity line of credit from Bank of America without any fees. I applied online without any paperwork.

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