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Larger borrowed amounts come from home equity lines of credit, vs credit cards

06/11/2007

It's easier to get a larger borrowed amount from a home equity line of credit, than it is from a credit card.

You can get a home equity loan 'line of credit' amount that's up to 100% of the equity that's in your home. Say you had a property worth $200,000: you could get a $40,000 line of credit, if you opted to take even just 20% of your home's equity out of your home in cash.

But, getting an initial limit of $40,000 with a credit card company is virtually impossible! Why?

With a credit card company, like MasterCard for example, their basic rule of thumb for most credit card applicants is to only initially give them a credit card limit that equals 20% of their income from the previous year: so you would have to make at lease $100,000 a year in order to get a credit card with a $20,000 limit.

But as long as you own a home, whether you completely own it, or have a mortgage on it that's partially paid off: it can be very easy to get a decent size 'line of credit' using a home equity loan.

Learn more about home equity loan lines of credit

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