What is a home equity line of credit?
A home equity line of credit (HELOC) is a revolving line of credit that is secured against the equity in your home. You can best think of it like a credit card. You can literally borrow money from your homes equity to make purchases.
Often times these are secured over and above a first mortgage, or original mortgage that already exists.
Since it’s secured by your home, the interest rate is often a lot lower than you would get using a credit card.
You can borrow against your home at any time, but any equity not used is not charged interest against.
Typically these only require interest only payments.
Of course the biggest risk is the fact that it’s secured by your home.
Terms and interest rates are dependent upon what the lender has to offer.
Like all cases of mortgages and loans, we suggest you talk to several professionals to see what is best for your situation. These professionals would include the lenders themselves, mortgage brokers, accountants, and financial advisors.