What is a Home Equity Line of Credit?
This is a secured, variable-rate loan that allows you to borrow against the available equity in your home. A Home Equity Line of Credit (HELOC) can be used for expenses such as home improvements, education, a vacation or even a down payment for a second home. Checks are available if you wish to write a check against your line of credit.
Also known as a HELOC, a home equity line of credit is a type of revolving credit for which your home is pledged as collateral. The interest rate and payments are variable. The term is defined by a draw period and a repayment period. The payment each month is based upon the outstanding balance owed. As payments are applied to principal, your available credit increases accordingly. You can estimate your home’s equity by adding the balance of all the debts secured by your home, then subtracting the total from your home’s value.
Related Questions
- Can consolidating debt through a new, refinanced mortgage, cash-out refinance, home equity loan or home equity line of credit (HELOC) help me cut my monthly expenses?
- What are the chances of interest rates being reduced to allow a refinance on an existing VA mortgage?
- What is a Home Equity Line of Credit?
