Business, Legal & Accounting Glossary
A home equiequity line of credit is a credit line against an owner’s home equity. Based on credit-worthiness, lenders may approve up to 80% of the appraised value of the home minus any mortgage owed, as a home equiequity line of credit at variable interest rates. A large initial draw is allowed from the home equiequity line of credit. The lender issues checks or a credit card for home equiequity line of credit withdrawals. The draw period for a home equiequity line of credit is usually 5, 10, or 15 years. A home equiequity line of credit may incur application, title search, appraisal, attorney, points, and participation fees. Being that the borrower’s house is the collateral in a home equiequity line of credit, it may be at risk if the borrower misses repayments. Truth in Lending Act allows a borrower to cancel a home equiequity line of credit within the first three days for a full refund of fees paid.
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This glossary post was last updated: 9th February, 2020