What is a Home Equity Line of Credit (HELOC)?
What is a HELOC?
HELOC stands for Home Equity Line of Credit. A HELOC is a loan that lets you use a portion of the equity in your home and borrow against it when you need it.
Equity: Equity is the value of your home minus what you owe to your lender.
Is your home worth more than the amount owed on the mortgage? If so, you have equity in your home and may be eligible for a line of credit secured by that equity. This type of credit is called a HELOC - a home equity line of credit. Unlike other loan options that pay out a lump sum upon closing, a HELOC lets you draw money as you need it over time.
HELOCs are often used for home improvement projects, especially when they increase the overall value of your home. But they can be used for other needs too, like consolidating high-interest debt, education costs, having flexible access to funds, and more.
With a HELOC, you have control over what you owe. Once approved for a line of credit, you control when and how much you withdraw, which means you control how much you have to repay. You also only pay interest on the amount you withdraw.
