What is a HELOC?


A home-equity line of credit, also referred to as a Heloc, allows homeowners to access funds, when needed, over the term of the loan as long as the amounts stay below the loan limit.

With a home equity loan, you receive the money you are borrowing in a lump sum payment and the interest rate is typically fixed. With a home equity line of credit (HELOC), you can borrow or draw money multiple times from an available maximum amount. Unlike a home equity loan, HELOCs usually have adjustable interest rates.

A HELOC can be used to fund major expenses including home improvements or college tuition. The Line of Credit is secured by a mortgage, and typically has a 10-year term that requires interest only payments. Following the initial 10-year period, the Heloc will “reset” and the principal becomes due. At that point, homeowners can choose to pay off the balance, refinance it into another first or second mortgage or make monthly payments of principal and interest, typically for a 20-year term.

Most Banks and Credit Unions offer a home-equity line of credit. If you're interested in applying for a HELOC, take a look through the lenders we profile on rateseer.

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