This free online HELOC Calculator will calculate the amount of the Home Equity Line of Credit you may qualify for based on the appraised value of your property, your current outstanding mortgages against the property, and the loan to value the lender is willing to offer you.
If you would like to calculate the minimum payment on a HELOC balance, please visit the HELOC Payment Calculator.
In case you're not familiar with it, a home equity line of credit (HELOC) is similar to a revolving charge account, where you can borrow from the line of credit as you need cash, as well as pay back what you owe as you see fit -- so long as you keep the interest current.
The size of the home equity line of credit you may qualify for is based on the appraised value of your property, the amount you owe on your property (total of 1st mortgage, 2nd mortgage, home equity loan), and the loan to value (LTV) the lender is willing to extend to you.
Even though the two sound the same, a HELOC is not the same thing as a Home Equity Loan. A Home Equity Loan is more like a traditional mortgage in that you borrow a specific amount and make fixed monthly payments over time.
The advantages of a home equity line of credit are that most lenders don't charge any closing costs, and you only pay interest on the amount of the HELOC your are using.
The disadvantage of a HELOC is that you will typically pay a higher interest rate than you would for a home equity loan.
Because a home equity line of credit is similar to a revolving charge account, it also comes with the same pitfalls as other forms of easy access to credit (credit cards, etc.).
Since it's so easy to simply write a check from your HELOC, if you're not good at fighting off the urge to succumb to instant gratification or quick and easy problem solving, you could end up maxing out your HELOC and have nothing to show for the money spent -- except for monthly minimum interest payments.
With that, let's use the HELOC Calculator to calculate the amount of the home equity line of credit you may qualify for.
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Appraised value of property: The dollar amount of the appraised value of your home. The appraised value is how much the house would expect to sell for. If you do not have a recent appraisal, you can estimate the value by seeing how much similar homes are selling for in your area.
Current balance of mortgages: The total of all current outstanding liens (1st mortgage, 2nd mortgage, home equity loan) against the property.
Loan to value ratio: The loan to value (LTV) ratio the lender is willing to offer you. The LTV is the percentage of the appraised value of the property that the total of all of your loans against the property must not exceed.
LTV of appraised value: This is the maximum amount that you can have borrowed against the property at any one time.
Less outstanding mortgages: This is the total of all of your current outstanding mortgages against the property, as entered in the top section of the HELOC Calculator.
Home equity line of credit you may qualify for: This is how much may be available for a home equity line of credit. The HELOC Calculator arrives at this figure by subtracting the total of all current mortgages against the property from the maximum amount you can borrow against your home. If the amount is zero, this means the amount you owe is greater than the LTV ceiling.