HELOC
What is a Home Equity Line of Credit?
A home equity line of credit, or HELOC, lets homeowners borrow money against the equity they have built up in their homes. Like other kinds of home equity funding, a HELOC is based on the value of your home compared to how much you still owe on your mortgage.
A HELOC is different than a home equity loan because it is a line of credit. A line of credit, a HELOC doesn’t have a set borrowed amount. Instead, it has a limit that you can borrow up to, similar to a credit card.
Some reasons people take out HELOCs include:
Renovations or remodeling on a home
An unexpected expense
Repair jobs
How Does a Home Equity Line of Credit Work?
A HELOC works very similarly to a credit card in that you can borrow up to a set limit, and you repay what you owe plus interest. Unlike a credit card, a HELOC is a secured line of credit backed by your home. This means rates on HELOCs are typically lower than unsecured loans, like credit cards.
