A home equity line of credit is an important tool to have in your financial arsenal. You should apply for it before you need it. This page will show you the process of how to get a home equity line of credit.

The content in this page is not a substitute for professional financial advice. Please contact your financial adviser before using the information presented here.

• A home equity line credit allows you to have funds available for any purpose, and only pay interest when you actually draw down the loan. The interest rates are on home equity lines of credit are generally lower than other forms of consumer debt, such as credit cards, and, depending on your personal circumstances, the interest may also be tax deductible.

Apply for a line before you need it (Creative Commons photo by lumaxart)

• Once the appraised value of your home exceeds the amount of any mortgage debt you have, you have equity in your home. You should consider taking out a home equity loan when:

1. You are in good financial circumstances, even if you don't need the cash.
   1. Banks are most apt to lend money to people when they don't need it. So, when you're employed and financially secure is a great time to apply for a home equity line of credit.
   2. Watch for promotions where banks will waive the closing costs and application fees, so you can get the line opened at no charge.
2. You can also apply for a line credit to be able to access funds for major needs, such as home improvements or college tuition.

• You have several options to choose from when applying for a home equity line of credit. Your current bank or credit union is usually a good place to start. You'll also want to investigate programs offered by whichever lender holds your first mortgage, as well as other local banks. Make sure to compare costs and loan terms to find the program that's the best fit for you.

• The process of applying is similar to that of applying for any mortgage. You'll need to complete an application and submit documentation which will be reviewed by the lender. The lender will also pull your credit score, and do a title search and appraisal of the property that will secure the line.

• The process of getting a line of credit begins with deciding that you need one, then selecting a lender and applying. After the line is in place, you'll have the comfort of knowing its available as an option to fund major needs, or as a source you can use to draw on in a financial crisis.

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