A home equity line of credit is the most popular form of taking out home equity these days.  It is a special home equity loan that works like any other line of credit. You qualify for a certain amount that you can borrow and you draw money from the account as you need it. The interest you pay is only on the amount actually borrowed and the interest rate is variable for the term of the loan. A home equity line of credit is 'revolving' meaning that you can borrow money, pay off the borrowed money and then re-borrow that money. Home equity line of credit money is accessed using specially issued checks.

Here is an example of a home equity line of credit: You are given a $40,000 home equity line of credit. You borrow $20,000 dollars and are charged a 7% variable interest rate. If you pay back $5,000 towards the principal, you still have $35,000 in your line of credit that you can borrow against as needed.

Advantages

• You can reuse the money as you please
• Interest rates are lower than regular Home Equity Loans
• Ability to borrow 125% of your homes value

Disadvantage

• Interest rates are usually variable

What Line of Credit is Right For Me?

I have lived in my home a long time and now I need to take money out...
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I am a new homeowner and need to get some cash...
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My credit is not good but I need money...
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I don't make a lot of money but I pay my bills on time...
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