Credit Scores

One of the things that need to be kept in mind about a HELOC from a bank: an above average credit report score needs to be presented by the borrower. In many cases, a score of 640 or above is required for consideration as well as a debt to income ratio of no more than 40%. In order to figure the ratio out, compare monthly income to monthly debt payments including the mortgage. If the debt payments are above 40%, the ratio is considered unacceptable by banks and perhaps by credit unions, although they are a bit less stringent in their requirements for lending money for home repair loans. A HELOC will require an appraisal of the house and have closing costs. The HELOC will be a revolving charge, just as a credit card is, and will be, in most cases, a variable rate of interest. One of the attractions for a HDELOC is that the interest paid each year on the loan is deductible, just a mortgage interest is.