HELOC is -Home Equity Line of Credit.
To understand HELOC, we must know what’s an equity and what’s a credit line is?
Equity can be defined as the net value of an asset or simply, Assets -Liabilities = Equity.
Consider you have CAR and the current market price of that CAR is 100,000 $, however you taken a loan against this CAR for 60,000 $, the equity of your CAR would be only 40,000 $.
Now that we understand what an equity is, let’s learn about credit line.
Credit line is also called as facility for a customer, it’s a calculated amount derived based on your credit scores, repayment history, net income, sources of income and many under factors primarily considered during underwriting stage and a credit limit is defined by the bank.