When you originally purchased your home in Massachusetts, you may have made a sizable down payment. Your down payment established equity in your home. Over time, your home equity may have grown considerably because of your regular monthly mortgage payments as well as property value appreciation. If you need extra cash for a major project or big plans, you may be able to access the equity in your home through a home equity line of credit. By learning more about what a home equity line of credit is, you can make a better decision about whether to apply for this source of financing.

Understanding What a Home Equity Line of Credit Is

Approximately 62 percent of Massachusetts residents are homeowners, according to the U.S. Census Bureau. If you are one of the many homeowners in this state, you may be able to apply for a home equity line of credit to access your equity. A home equity line of credit similar to a home equity line because both financing options use the equity in your home as collateral. They both also provide you with a competitive rate and term to create affordable monthly payments. With a home loan, you will be provided the full loan amount in a lump sum at closing. With a home equity line of credit, on the other hand, you will be permitted to take out money from the line of credit for a limited period of time. During this time, you often can use either checks or a card to access your line of credit. When the limited time period is over, you will need to start making payments on any funds you borrowed.

Estimating Your Credit Line Amount

It is wise to estimate your available equity before you apply for a home equity line of credit in Massachusetts. Some homeowners are surprised by the amount of equity they have available after even a few years of home ownership, but keep in mind that you cannot access all of your equity. Lenders typically will not allow you to borrow more than 75 to 80 percent of your home’s current value, and this includes your home’s first lien mortgage. Therefore, take time to determine your home’s current value, and calculate 75 to 80 percent of this value. You can then subtract your first lien mortgage’s current balance. If you have a second lien, it will need to be paid off with your equity. This is because the line of credit will need to take the second lien position. After you have made this calculation, you will be able to determine how much money you will have available through a home equity line of credit.

Finding Your Lender

There are many fabulous things you can do with your line of credit. For example, many homeowners make the wise decision to roll outstanding credit card debt into their line of credit. Others use the funds to renovate their home and to increase property value even further. These are a few of the fabulous options available to you, but first, you need to find a qualified and reputable lender to work with. Some of the top Massachusetts lenders you can choose from include Third Federal, Flagstar Bank, Eastern Bank, TD Bank and Sovereign Bank, to name a few.

As a homeowner, your home equity may be accruing at a fast rate, and you may be able to use your equity for several beneficial purposes. Take time to explore the incredible options available and to analyze your available equity. Then, review the lenders to determine loan terms. By taking these steps, you can determine if a home equity line of credit is right for you.