How does a home equity line of credit work?
Is it like a mortgage, if you don't pay can they take your house?
- Anonymous1 decade agoFavorite Answer
Yes...just think of it as a credit card that is secured by your house.
Usually you can qualify for a credit line up to the amount of equity in your house.
If your house is worth 250K, and you owe 200K on it...some lenders will give you a line of credit up to the available equity (50K).
If you default or fail to pay on it...the lender will foreclose and attempt to recoup the amount owed on the line of credit by sale of the house.
- eyJudeLv 71 decade ago
You borrow against what your house is worth (after an apprasial) so it is actually what it is worth to sell
You can get either a intrest only (which does not lower the amount you owe) or regular where you are paying intrest and principal
- DentistLv 71 decade ago
you get it by the equity in your house and your credit risk.
yes they can take your house.
that's why financial adviser suze orman is against them.