A loan to purchase a home is usually the first mortgage lien recorded on a property; subsequent loans depend on the amount of owners’ equity in the home and generally require a new appraisal. If you need extra money periodically, a Home Equity Line of Credit (HELOC) might be your best choice, as it allows you to access cash through a second mortgage while your current mortgage remains unchanged. Once the lender approves you for a maximum line amount, you can access the available funds as you need them.
To qualify for a HELOC, you need to have available equity in your home, this means that the amount you owe on your home must be less than the total value of your home. You can commonly borrow up to 85% of the value of your home minus the amount you owe. Generally, a lender looks at your credit score and history, employment history, monthly income, and monthly debts – Just as when you applied for your mortgage the first time.