How Does A Home Equity Line Of Credit Work Bank Of America

During the draw period or borrowing period you can access funds through the line of credit to pay for expenses. Your home equity line of credit heloc is a form of revolving credit.

Previously you must understand the background of Credit and get some How does a home equity line of credit work bank of america references in other articles on this website.

A home equity line of credit may charge you a lower interest rate than other types of borrowing such as credit cards car loans and private student loans.

How does a home equity line of credit work bank of america. Fixed rate loan option at account opening. Unlike a conventional loan a home equity line of credit is something you establish ahead of time and use when and if you need it. Helocs have a 10 year.

You may convert a withdrawal from your home equity line of credit heloc account into a fixed rate loan option resulting in fixed monthly payments at a fixed interest rate. Bank of america s heloc has a minimum credit line amount of 25 000. A heloc often has a lower interest rate than some other common types of loans and the interest may be tax deductible.

A home equity line of credit also known as a heloc is a line of credit secured by your home that gives you a revolving credit line to use for large expenses or to consolidate higher interest rate debt on other loans footnote 1 such as credit cards. The maximum line amount is 1 million for your primary residence and 500 000 for your second home. You borrow from the available equity in your home which is used as collateral for the line of credit.

1 an auto pay discount of 0 25 for setting up automatic payment at or prior to heloc account opening and maintaining such automatic payments from an eligible bank of america deposit account. In that way it s a little like a credit card except with a heloc your home is used as collateral. The following discounts are available on a new home equity line of credit heloc.

2 an initial draw discount of 0 05 for every 10 000 initially withdrawn at account opening up to 0 75 for initial draws of 150 000 or more when that minimum balance is maintained for at least the. The minimum heloc amount that can be converted at account opening into a fixed rate loan option is 5 000 and the maximum amount that can be converted is limited to 90 of the maximum line amount. A heloc has a credit limit and a specified borrowing period which is typically 10 years.

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