What Is A Home Equity Line Of Credit And How Does It Work

A home equity line of credit is a loan that that helps you fund a long term project by allowing you to withdraw varying amounts of money at different times.

What is a home equity line of credit and how does it work.

To start the funds from a home equity loan are disbursed in one. A home equity line of credit also known as a heloc is a line of credit secured by your home that gives you a revolving credit line to use for large expenses or to consolidate higher interest rate debt on other loans footnote 1 such as credit cards. Before you apply for a heloc see our home equity rates check your eligibility and use our heloc calculator plus other heloc tools. In our example you could borrow up to the maximum 100 000 during the 10 year draw period making interest payments on the balance.

As collateral your home is what is used as security for the loan. A home equity line of credit or heloc is a second mortgage that gives you access to cash based on the value of your home. Unlike the continuous line of credit that comes with a heloc home equity loans work in much the same way as your first mortgage. A heloc often has a lower interest rate than some other common types of loans and the interest may be tax deductible.