Choosing a Home Equity Line of Credit

A home equity line of credit can be the perfect solution for the individual who needs additional money for a specific project but who either does not want to use all of the money at once or who is unsure of exactly how much he will need to borrow .

By taking out a home equity line of credit, you can only use the amount of the loan that you need and only use that when you need it. This allows you to take your time with your projects, and can also let you repay portions of the loan as you go. If you think that you might be interested in a home equity line of credit but are not sure exactly how one works, then the information below should be of great use to you.

Defining a Line of Credit

If you're unsure of what a home equity line of credit is, then you're probably not alone. While home equity loans are a more popular method of borrowing against the equity that you've built up in your house, home equity lines of credit can actually be more useful in many situations.

A line of credit based on your equity works in much the same was as a standard credit card; the total amount that you can borrow is defined by your lender, and you can apply purchases towards your line of credit as you need them.

This can allow you a lot more flexibility in how you use the money that you borrow, especially in you are using your line of credit to finance home improvement projects or for other purposes where it would be advantageous to spend the borrowed money over a period of time.

Using the Line of Credit

Using your home equity line of credit is as easy as using any credit card, as you will be issued a debit card by your lender which is linked to the loan account. As you use your card for purchases, the value of those purchases will be added to what you owe for your loan. Interest and other charges will also be added as time goes by, although you can choose to stop making charges and beginning paying off your debt before you have reached the limit set by your lender.


When you begin repaying the debt you've built up with a home equity line of credit, there are two basic ways that you can handle your repayment. If you choose, you can charge a limited amount to your credit line and then continue making payments until you have paid the total amount down for future use.

Of course, if you have multiple large purchases to make then you might prefer to simply use the credit line to make a number of charges and then begin paying on the larger amount that you owe.

Either way you choose to handle your credit, the entire amount that you charge will have to be repaid; you simply have the option of charging items in small increments and paying each off soon after it has been charged or charging items within a short period of time and then repaying the debt as though it were a standard loan.

Source by Paul Rogers

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