Home Equity Line Of Credit

Qualifying For HELOC

The first thing a lending institution will look at before deciding if someone qualifies for a HELOC is their credit score, which will determine the likelihood of whether or not they have to ability or likelihood to pay back the line of credit they are borrowing against. Lenders typically look for a credit score of 740 or higher to provide the best rates. While lower credit scores do not disqualify you, it may lead to a much higher interest rate in the long run. The second main consideration for whether or not someone qualifies for a HELOC program is whether or not they can keep somewhere between ten and twenty percent of their home equity. This means HELOC loans cannot be taken early in home ownership because enough equity has not yet been built. It is best to check with the specific lending institution for their exact requirements on this matter.

Continue reading to learn about the major positives of a HELOC.