Credit Does Equity Home Line Work

It's very similar to a Home equity loan. If you have 50 grand of equity, they will loan you 80% of that,(40,000).
A home equity loan gives you all the money at once and an installment loan shows up on your credit for the 40 grand. It is treated similar to Mortgages for credit score purposes (good).

A home equity line of credit loans you the money only as you need it so only the amount that you've actually used shows up on your credit report. It is treated similar to Credit Card debt for credit score purposes.

2006-01-14 08:46:56 by dcsweepea

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Line of credit currently at $60,000, but want to increase to $150,000 just in case I ever need it. If I never really use it, does it still affect my credit rating?

If you don't use the loan and manage your money, I think the increased amount can work against you. The credit companies measure your income/or worth against the total credit you are carrying. If you are carrying more credit than you can afford, you are a higher risk. If, on the other hand, you have plenty of income to handle such a high loan, it probably will have no affect until you use it.

2007-10-11 13:26:58 by DRESS

I'm thinking about applying for a home equity loan or line of credit for my home but am discouraged by my below average credit score. To refinance, any and all applicants must also be on the title document, so would the same rules apply on a home equity loan or line of credit?

Anyone cosigning for something such as that would have to be on the deed to qualify. Otherwise is is not a home equity loan but a personal loan.

2007-10-08 19:02:26 by pingkitoe

Hi,
I'm referring to the following case (example):
- property appraised value: $100,000
- current mortgage principal/balance: $50,000

My question is in the example above, if I want to refinance up to 75% and the bank approved it, how does it work TECHNICALLY in most cases:
1. I get a new $75,0000 mortgage instead the current $50,000 mortgage? or:
2. I continue to pay the $50,000 mortgage and get an additional $25,000 Home Equity Line of Credit? or:
3. Other?

THANKS.

1 is the answer. But $50k of the $75k will be used to pay off the loan so you will only walk away with the remainder (less closing costs probably).

2008-10-29 17:41:03 by Independent_guy

I am new to home ownership.... and just got a $50,000 equity line of credit. They told me I could "lock" only a portion of it now (i.e. $40,000) and then call back at any time and lock another chunk. I asked her what she meant, but her answer went right over my head... Please explain in dummy terms what it means to "lock" $40K and why I want to do that? And do I want to call back and lock the rest? I am sooo confused. Thanks so much for any information anyone can provide!!

Previous answers are correct in that locking means you freeze the interest rate. But along with that, you freeze your ability to use the line of credit. In your case, if you lock the $40,000, that $40,000 will convert from a line of credit to a term note (typically you'll have anywhere from 5-20 years to pay it back). But that's $40,000 you won't be able to draw against in the future. So say you lock the rate and then the next day you pay $20,000 on the loan. If you hadn't locked it, you could have borrowed $30,000 (it's a $50,000 line of credit and you paid off $20,000). But since you locked $40,000, and it (probably) converted to a term note, you can't borrow against the $20,000 you just paid off -- you can still only borrow the $10,000 (diff b/w $50,000 and $40,000).

Your bank officer is the best person to explain the ins and outs, but the above is what I understand about your situation.

2006-08-31 22:13:41 by LilyDaisy