If you qualify, you can borrow a maximum amount equal to 50, 60, or even 80 percent of your home's equity value, minus the amount of your outstanding mortgage. Because it works like a renewable line of credit, you have complete freedom of choice when it comes to borrowing with your home equity line of credit. No need to apply for a home improvement loan, auto loan, money for education, or any other reason you may need to borrow money. A home equity line of credit makes those funds available whenever you need them.

Most lenders designed the home equity line of credit to be as easy to use as a checking account. Whenever you need to borrow money, you can "write your own loan" by simply writing a check. Since you only need to apply for your home equity line of credit once, you'll have continual access to the available balance in your account, and in most cases, your balance renews itself as you make payments. Each month, the status of your home equity line of credit is usually detailed in a complete statement showing all your account activity. Your available credit line balance, the minimum payment due, the payment due date, payments made, and finance charges should be clearly indicated. You can choose to extend your payments for a period of years, or make it larger-than-minimum payments with no pre-payment penalty.

The amount of your home equity line of credit is based on the market value and equity of your home. To determine the amount of equity in your home, you take your home's appraised value minus the current amount of your mortgage and any other home equity loans. Most lenders will lend you a percentage of this amount. The true value of a home equity line of credit is that unlike any personal loans, in most cases the interest you pay can be deducted if you itemize on your Federal tax return. You should check with your tax advisor for your specific situation.