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Get a Higher Home Equity Line of Credit

It is actually fairly easy to get a higher home equity line of credit. Getting a higher home equity line of credit can be as easy as paying off your mortgage.

A home equity line of credit is an amount of credit determined by the amount of equity you have in your home. The equity in your home is the difference between the value of your home and the amount owed on it.

The more you owe on your home the less equity you will have available to borrow against it. This means that you can increase your home equity line of credit by increasing the amount of equity you have.

For example if your house is worse $350,000 and it is mortgaged for $200,000 you have $100,000 in equity available. This doesn’t mean that you will be able to get a $100,000 line of credit; however, most home equity lines of credit are a percentage of the equity available, usually 80%. That means you get an $80,000 line of credit on the $100,000 in equity.

Paying Off Mortgages and Home Loans can Increase Your Home Equity Line of Credit

The amount of equity you in your home determines the amount of your home equity line of credit. This means that you should be able to get a higher home equity line of credit by paying off your mortgage and other debts on your home.

You should probably pay off existing lines of credit or home loans before paying down your mortgage principal because these come with higher interest rates. Paying off any debt on your home will free up equity you can borrow against. Paying off the loans or credit with the highest interest rates early will save you money in the future.

Once loans and lines of credit are paid off you should start paying down your mortgage. Even if you can’t pay off your entire mortgage you can give yourself more equity and a higher line of credit by paying down your mortgage principal.

Whenever you make a mortgage payment you are paying down the mortgage. Paying more than the standard mortgage payment helps you pay down the mortgage principal. Just paying 10% more than required on your mortgage payments can give you more equity and a higher line of credit.

Some Other Steps You Can Take

There are some other things that you can do to increase the line of credit on your home. One of the best is to increase your credit rating.

The interest rates and sometimes the amount of equity you can borrow against are determined by your credit rating. Those with a good or excellent credit rating will pay a lower interest rate than those with poor or bad credit. Raising your credit rating to good or excellent can increase your line of credit.

You can raise your credit rating by removing false or inaccurate information from your credit report. You can see a copy of your credit report and learn how to remove false items from it by going to the websites of the three major credit bureaus: Equifax, Experian, and Trans Union.

Why You Should Get a Higher Home Equity Line of Credit

Even if you don’t plan to use it you probably should get a higher home equity line of credit. You should remember that you don’t have to use a line of credit. It is simply credit that is there for you to use if you need it.

Getting a higher line of credit now will mean you have extra credit available in future emergencies so you won’t have to take money out of your savings or investments. It can also enable you to make future purchases or pay for remodeling in the future.