What is a home equity line of credit (HELOC)?

A home equity line of credit, or HELOC, is a revolving line of credit that is tied to the equity in a Kansas homeowner’s home. A HELOC acts like a credit card, where the borrower can borrow and repay up to their credit limit, which is based on their home equity and their ability to repay the line of credit. When a borrower applies for a HELOC, they provide details about their finances, such as their annual income, expenses, and asset information. Once the HELOC is approved, the lender will set a credit limit. The home equity line of credit works similarly to a credit card, in that the borrower can draw from the line of credit up to the approved limit as needed. For example, if the approved HELOC limit is $50,000, the homeowner can borrow up to 50,000 dollars to pay for home repairs or other home-related expenses. Like a credit card, the borrower must make regular payments on the money they borrowed, and interest will be charged on the borrowed funds. The Kansas Mortgage Law requires that borrowers receive truth-in-lending disclosures when taking out a HELOC. This disclosure is important for borrowers, as it outlines the fees and charges associated with the loan, as well as the APR and the repayment terms. This ensures that borrowers are aware of the overall cost of the loan and can make an informed decision when deciding if a HELOC is right for them.

Related FAQs

What are the risks of taking out a mortgage?
Does the interest rate on my mortgage change over time?
What happens if I don’t make my mortgage payments?
What is a mortgage?
What is a mortgage payment?
What is an adjustable rate mortgage (ARM) adjustment period?
What is the difference between a home equity loan and a refinance?
What is private mortgage insurance (PMI)?
What is a “no cost” mortgage?
What are the differences between a lender and a mortgage servicer?

What is a home equity line of credit (HELOC)?

Related FAQs

Related Blog Posts