Home Equity Line of Credit in Maryland
Maryland may not be the biggest state in America, but it has a large number of residents who are proud to call it their home. The median home value in Maryland is approximately $300,000 and there are over two million homes throughout the state. Appreciation values have been on the rise in Maryland because of the increase in sales and mortgage refinancing. Over half of all adults living in Maryland own their own property, so taking out a home equity line of credit is a lot more common than in other areas of the country.
What is a Home Equity Line of Credit?
A home equity line of credit, more commonly referred to as a HELOC, is a line of credit you take against the equity of your home. The lender gives you a specified amount to borrow against that is equivalent to about 85 percent of the value of your property. This option works similarly to a credit card, but you’ll be working directly with a bank and your house is used as collateral. Because your home is being put on the line, you need to take out a HELOC with the knowledge and understanding that anything you borrow needs to be paid back in full with interest.
Benefits of Opening a HELOC
One of the main reasons homeowners go for HELOCs compared to your average credit card is the borrowing limit. Most typical credit cards have a draw limit of only $20,000. This may not be enough for homeowners who need to make large purchases or have emergency expenses that will cost their family a lot of money. The bank will approve your draw limit for roughly 85 percent of your home’s value, offering you a large amount to withdraw on whenever it is needed. Your FICO score is not a major deciding factor when taking out a HELOC. The bank doesn’t necessarily care about your credit score so long as your home has a lot of value and you’ve been its owner for more than 10 or 20 years.
How to Find the Right Bank and Going Through the Application Process
There are a plethora of banks throughout Maryland that offer home equity lines of credit. Comparing rates and determining whether you’ll want a fixed or variable interest rate will make all the difference when opening your account. Most banks will have their own specific regulations and guidelines for applicants looking to open a line of credit with their facility.
Below is a list of some of the banks in Maryland offering HELOCs:
- Third Federal
- Wells Fargo
The application process is identical to anything you’d find with a credit card application form. The only difference is that the bank wants to have solid information regarding your home. They’ll need documentation of when you obtained ownership and your home’s assessed value. If your home has not been assessed for several years, you’ll need to get it professionally evaluated to determine its worth. Most banks will let you know if you’ve been approved or denied within a month.
If you should choose to sell your home while your home equity line of credit account is still open, you’re fully responsible for paying off the balance on your account. If you become delinquent while you’re still the owner of your house, there is a possibility that the bank will take possession of the property to make up for its losses. Finding a reputable bank will give you the chance to have a good experience opening a line of credit tied into the equity of your home.