How To Use An Equity Home Line Of Credit

Introduction

A home equity line of credit, is credit in which your home is the collateral. To obtain a home equity line of credit, you should contact a bank or credit union. You may wish to go through the same bank that you have your mortgage through, but that is not necessary. You are able to go where ever you choose. Shop around for your equity home line of credit in order to get the best deal with the best rates. While getting a home equity line of credit can be useful and come in handy, you should use this wisely. It is not a good idea to use this line of credit for spending sprees and extravagance. A home equity line of credit should be used for important items.

Step 1

• Apply for your home equity line of credit. After researching different lending institutions, determine which will offer you the best deal. Discuss your option with the lending institution of your choice and fill out the applications and paper work. The application process will require documentation from you, as well as certain fees. Ask questions and be clear on what you will need for the process.

Step 2

• Wait for your checks and/or card to come in. You will be able to write checks or to us a VISA card to make purchases or get cash from ATMS. Once you are approved, you will receive the checks and card.

Step 3

• Determine what you will be spending your home equity line of credit on. Often this is used for a large expense. This could be for home improvements, college tuition, medical bills, or other large expenses. While you can use your home equity line of credit for anything you wish, it is a good idea to only use it for important items and to spend it wisely. Keep in mind that you will be making payments to pay this back. Another thing to keep in mind is that your home is the collateral for this loan. Not paying the money back will result in a lien on your home and could result in losing your home. 

Step 4

• Keep track of your spending. It is a good idea to have a written account of when you spend and what you spend the money on. It is easy to lose track of spending and keeping this report will be a help to you.

Step 5

• Make your payments each month as they come in and be sure to be on time with them. Being on time is very important for your credit history. Being late looks bad on your credit report. 

Tips

If you can afford to pay back more each month than you are required to, it is a good idea to do so.

Think about every purchase before you use your equity home line of credit to make it. Be sure it is something that is important to you.

You only make payments on the amount of money that you spend. If you have a home equity line of credit that you do not use, you do not have to pay. It can just be there as a backup if needed at some point.

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