A home equity line of credit calculator or HELOC calculator is an important tool for those homeowners in need of extra funds. The use of a HELOC calculator can allow a potential borrower the ability to explore various lending options available including credit line, monthly payments, amount they may potentially borrow and more. By changing one or more variables a home equity line of credit calculator can present different scenarios to the homeowner and allow them to choose between a revolving credit based loan or a standard equity loan.

Why use a HELOC Calculator?

A homeowner has a limited amount of resources when it comes to borrowing money with a home as collateral. Usually a standard second mortgage is acceptable with a set loan amount, repayment schedule and fixed interest rate. This cookie cutter approach does not work for everyone, though, and many homeowners appreciate having access to cash when needed without a long-term commitment. The use of a home equity loan is just one way that people use to find alternative loan sources to pay off credit card debt.

HELOC Calculator - Home Equity Line of Credit Calculator GuideA home equity line of credit will offer the ability to borrow cash as needed up to a predetermined limit and the ability to maintain a zero balance when the bill is paid. Because these credit lines generally have tax deductible interest many homeowners choose to pay off existing credit cards and rely on the property-backed credit to meet their needs. For many people the taxation issues are beneficial, but others quickly succumb to temptation and risk their home due to late or unpaid payments.

The HELOC calculator will allow a homeowner to clearly assess the situation of borrowing different amounts. The understanding of exactly what the principal and interest payments will be for different charge amounts make this a very flexible planning tool. It is important for a homeowner to check the math and understand the payment repercussions well before sitting across the desk from a local mortgage broker.

How a HELOC Calculator Works?

The methodology behind a home equity line of credit calculator is simple really. The same general guidelines that a lending institution will use are simply input at formulas. The output from a heloc calculator is generated in much the same manner as a standard financial calculator. For example, one of the most common uses is to find the amount of principal that might be borrowed. Generally, this is a simple loan-to-value equation where the fair market value of the home is compared to the outstanding debt. If this number meets a desired threshold it allows the lender to offer better credit terms relating to limits and interest rates. Most of the other features of a home equity line of credit calculator are similar to output from other financial calculators: repayment schedules, amortization tables, etc.

Finding a HELOC Calculator

There is a multitude of free HELOC calculators available online from many respectable financial sites. Many are also offered as an excel download for those persons who may not feel comfortable disclosing financial information online. The usage is simple with only a few variables needed to provide the user with a better understanding of a potential financial transaction. It is very important in these tough financial times for homeowners to consider the alternatives available to them for cash flow issues. A line of credit may be better than a home equity loan or reverse mortgage, but it still has potential pitfalls. Be smart and use a heloc calculator to get a better understanding of your financial picture.