How Much Can You Get With A Home Equity Line Of Credit?

In past years, you could basically walk into a bank and walk out with a home equity line of credit up to $30,000 with a good credit score and with just about no questions asked. Today you should expect a lot more due diligence by the lender who approves your home equity line of credit application.

Some lenders will only give you a home equity line of credit up to 70 percent of what the bank thinks your home is worth. If there have been declining values in your area, you might be surprised to find out that you don’t actually qualify for a home equity line of credit in any amount because your current loan exceeds that home loan-to-value ratio based on what the bank feels your home is now worth.

If you know that your current home loan-to-value ratio is somewhat less than the 70 percent, you might be able to get a small line of credit – but at a higher interest rate.

During the real estate boom years, you could get variable rate home equity line of credit at “prime minus 1.” That means that your interest rate would float based on the prime rate (which is currently 3.25 percent), minus 1 percent for an effective interest rate of about 2.25 percent.

Today, lenders are offering far less advantageous rates. In some cases, home equity line of credit rates offered today may be as high as the prime rate (3.25 percent) plus 2 percent or more, for an effective interest rate of 5.25 percent.

Some lenders will offer lower rates for higher lines of credit, so it pays to shop around and compare rates.

Read more about home equity loans and if you can refinance your mortgage into a home equity line of credit.