Home Equity Line of Credit

The draw period usually lasts up to 10 years before the repayment period starts. Your interest rate will fluctuate along with the market conditions, and you will be charged interest on your outstanding balance during the withdrawal and repayment phase.

When you take out a HELOC, your house becomes collateral for the loan as you borrow against the equity in your home. As you repay the loan every month, your HELOC credit amount increases.

A HELOC works much like a credit card or revolving loan, which means you can borrow against it as long as you keep up with your payments.

To qualify for a HELOC, your application should meet the following requirements:

• Available equity that ensures the amount you owe on your house is less than its value
• An acceptable debt-to-income ratio and a good credit score
• Copies of tax returns and W-2 forms
• Pay stubs or P&L statements if self-employed
• Recent bank statements