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How a Line of Credit Works
(Please Find
Color Keyed Definitions to the Right) |
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As you may have already discovered
through our site a home equity line of credit is a credit line
against the amount of equity you have in your house. When you
first get a line of credit loan you can take an
initial draw. For example, if
you get a credit line for $50,000 you can "draw"
out $20,000 at the time of close and have $30,000 in credit left.
Now if you pay the $20,000 back during the
draw period you can then borrow that amount again until
the repayment
period.
After the initial draw at the time of close you take more money out
by using special checks that will be issues to you by the lender.
All you do is right a check to yourself for the amount that you
need.
Home Equity Line of Credit Tools
What is a
Home Equity Line of Credit?
What is a Home Equity Loan?
Home Equity Line of Credit vs. Home Equity Loan
Qualifying Guidelines
Variable vs. Fixed
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Definitions of Terms
Draw - To borrow
money out of your credit line.
Draw Period - The amount of time
that you will be allowed to draw money from your credit line. Usually 5,
10, or 15 years.
Initial Draw - The draw taken at the
time of close of the loan.
Repayment Period - The timeframe
after the draw period where you can no longer borrow money and must pay
back the loan. |
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