How Does a HELOC Work?

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When you have a need for some extra money to make a big purchase, renovate your home, or pay off a high-interest credit card, a HELOC (home equity line of credit) might be just what you are looking for. A type of revolving credit, a HELOC is secured by your home equity. This open-ended loan can be charged up or paid down over the set term of the loan. The rate of interest changes (usually every month).

In a HELOC, your lender will approve you for a predetermined amount of credit - the largest sum you can borrow at any one time under the plan. Your credit status, salary, debt and other financial information will determine your credit limit. You are required to have an appraisal to determine your home's current value. Your property's market value, subtracted from your remaining mortgage loan balance will help to set your particular credit limit.

First National Bank can answer questions about Home Equity Lines of Credit and many others. Give us a call at (575)437-4880.