If you’re shopping around for new credit and you own a home, a home equity line of credit, or HELOC, is an option. Using the equity in your home, you can qualify for a large amount of credit at a fairly low interest rate.A home equity line of credit is a revolving credit account that uses your home as collateral. Depending on the amount of equity you have in your home, it’s possible to obtain a large credit limit, much larger than most credit cards allow.With most HELOCs, your credit limit is calculated by using a percentage of the home’s value and subtracting the balance of the mortgage. So, your HELOC limit might not equal the full amount of equity you have in your home. Even so, it’s possible to have a credit limit of $30,000 or more, depending on your home’s equity.The application process and fees associated with an HELOC are very similar to those of a mortgage. As such, it’s common for initial fees to total several hundreds of dollars. So, when you’re choosing a HELOC it’s important that you shop around for the best terms, the same way you’d shop around for a mortgage. Because interest rate and fees vary from one lender to the next, getting a few loan quotes is important to minimize your cost in terms of interest rate and fees.Shopping around for an HELOC by getting free loan quotes is a more effective way of finding a loan than simply choosing a lender through other arbitrary means. When you compare loan quotes from several different lenders, it’s likely that you’ll find lower interest rate and fees with a lender that you didn’t first consider.Get free loan quotes for different lenders before you make an application for a home equity line of credit.
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