Equity Line: The Flexible Credit

2007-03-08 10:33:40

( Financial )



REVOLVING CREDIT LINE

Equity line refers to a form of revolving credit line where a property or asset serves as collateral for the loan. An equity line is like having a pre-qualified loan available anytime you may want to use it to suit your particular purpose.

The most common type of equity line is known as home equity line. Under this financial service, you can get an equity credit line that is secured by the predetermined value of your home. An equity line of credit calculator will estimate the fair market value of your property and subtract the remaining debt if the property in question is currently mortgaged. This is where your credit line will be based.

However, your credit line will also be determined by looking at your financial standing – your ability to pay based on your income, outstanding debts, as well as your credit history.

YOUR HOME AS SECURITY

Home equity line works pretty similar to having a secured credit card. Your credit card line is based on the amount of savings that you have in the bank. Similarly, your equity line is secured by the value of your property.

Once your equity line is approved, that credit line will be available for you anytime you wish to use it. The approved equity line will be valid for a specific period. Be mindful though, that equity lines do have limitations and specifications on how it can be used. Some have minimum amounts that you can draw every time you use the line, while others require you to take a minimum initial credit once the equity line has been approved.

If you are looking for a line of credit, home equity line is an option you may want to think about. Just remember that what may work for others may not work for you. Study carefully your financial situation and decide whether an equity line will help or just make things worse.


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