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home equity line |
| A home equity line of credit is a form of
revolving credit in which your home serves as collateral. Because the home
is likely to be a consumer's largest asset, many homeowners use their credit
lines only for major items such as education, home improvements, or medical
bills and not for day-to-day expenses.
With a home equity line, you will be approved for a specific amount of credit--your credit limit, the maximum amount you may borrow at any one time under the plan. Many lenders set the credit limit on a home equity line by taking a percentage (say, 75 percent) of the home's appraised value and subtracting from that the balance owed on the existing mortgage.
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