Home equity lines of credit are generally as flexible as credit cards. They may have minimum or maximum amounts of money that can be withdrawn in the draw period, but for the most part allow the borrower freedom that most loans do not provide. Also, depending on the lender, access to the home equity line of credit can be via checks, credit cards or a combination of the two.
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If you are interested in a loan to fund intermittent costs, such as a series of home improvements or college tuition, home equity lines of credit are a good choice, especially if you are not sure of the exact amount you need to borrow.
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As with a home equity loan, home equity lines of credit allow you to borrow against the value of your home, usually up to 80 percent of your equity, minus the mortgage. Borrowing against home equity gives the lender more security, which allows for more flexibility in the qualifying process. Home owners with less than perfect credit will find it easier to procure a home equity line of credit or a home equity loan than other non-secured loans.
Home equity lines of credit are generally adjustable rate loans but have guaranteed introductory rates. Adjustable rate loans usually allow for much lower initial rates, but they fluctuate along with the market. These rates adjust with current interest rates as determined by certain indexes. In the case of home equity credit lines the index is often the prime rate, which can be more stable than indexes used to calculate interest on loans that are not lines credit.