Home Equity Line Of Credit (HELOC) Explained

HELOC allows you to borrow from the available equity in your home, using your home as collateral for your credit line. The available credit line will be reloaded when you pay off the outstanding balance, just like a credit card. 

You know how much money you are qualified to borrow with a home equity line of credit, though you can borrow only the amount you need. This arrangement allows you to borrow multiple times up to the approved credit limit. You can also borrow only once, taking the precise amount you need.

With the home equity line of credit (HELOC), you will be required to make small payments at first and more significant payments as you go. A HELOC is a flexible loan option because it allows you to control your loan amount, balance, and interest rates.

However, it carries the risk of a credit freeze, in which your lender can cancel your loan approval before taking the following loan. Freezes can be unexpected and can occur when you need the money. Your lender can freeze your HELOC if you don’t comply with the terms of the loan agreement. 

Also, your interest rate on a home equity line of credit (HELOC) will vary with the amount you take out of the total value.