So I have a heloc question

8 Replies

So just based off the title "Home Equity Line Of Credit" I assumed a heloc was a line of credit based off of the amount of equity that you have in your home. When I called a bank about it they said they do 89% LTV of the appraised value of the home. This doesn't make complete sense to me at the moment. I know a heloc is basically a second mortgage but i didn't know you could have more funds available than the amount of equity in your home.
This means they will loan on 89% of the homes appraised value MINUS your current mortgage or any other loans on the property. Say you have a 50k first mortgage on a 100k house. they will effectly lend you 39k on a heloc. making total loan to value 89%.

You nailed it on the second mortgage idea. A HELOC is the bank saying here have this line of credit worth x amount of what you home is worth minus the mortgage you have.

Home is worth 100k

Hold equity of 40k

Hold mortgage of 60k

89% of 100k = 89k

Line of credit you could get 89k - 60k =  29k

@Jacob Price its completely based on the equity of the home as well as the appraised value. hence the word home EQUITY.
Am I missing something here? I don't see an edit option while using my Android phone on the forums.

Okay I got it now. Thank you guys for clarifying!

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