How2Day: What Kind of Information Is Available for My HELOC?

A home equity line of credit is a loan that uses your home equity as collateral. Your equity is the value of your home minus the amount you owe on it -- the amount of the home you own outright. Knowing what information is available for your HELOC will help you structure your payments accordingly.

Interest rates on HELOC loans are almost always variable and are attached to published interest rates such as the prime rate. These rates are available online or in the newspaper. The exact relationship between your interest rate and the published interest rate -- the "margin" -- will vary depending on your credit history, other debts and your general ability to pay back the loan. The riskier the bank determines you to be, the higher your interest rate will be, and vice versa.

If the interest rate on your HELOC is variable, your repayments will be subject to change along with the published rate. But HELOC interest rates also have ceilings that limit how high they can go during the life of the loan. Your lender can give you specific information about the rate ceiling.

Many HELOC loans only require interest payments during the drawdown period. Once this period is up, you need to pay back the loan's principal. The two basic plans for repayment are balloon payments and amortization schedules. A balloon payment is a one-time payment of the loan's entire principal. An amortization schedule, on the other hand, is a plan in which you pay off some of the principal each month for a set period of time, eventually paying the loan back in full.

You might be able to renew the line of credit at the end of the drawdown period. Whether you will be allowed to do so or not is up to your bank. In general, the bank will be more likely to renew your line of credit if you've been a good borrower, consistently making your payments on time.

The amount of credit available to you in a HELOC is partially determined by your home equity, but it is not always a one-to-one ratio. Your lender will determine how much credit you can take out by assessing your credit history and the value of any outstanding loans.

Home equity is determined by the value of your home (not the price you paid) minus the balance of your mortgage. So, if your house is worth $200,000 and the balance of your mortgage is $100,000, the starting point for your credit calculation will be $100,000. You probably won't get the full amount, though. You are more likely to receive 75 percent or so, depending on your credit history.

Lenders are required to disclose any miscellaneous charges on the loan, such as maintenance fees, attorney's fees, appraisal costs and title insurance. The lender cannot charge you any fees until he or she gives you all the necessary information about the loan, so you should have everything in front of you when you sign.

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