What is a heloc?

A HELOC (Home Equity Line of Credit) is a revolving line of credit secured by your home. It functions similarly to a credit card, where you are approved for a specific limit, can borrow against it as needed, and pay interest only on the amount you actually withdraw.

Key characteristics include:

• Collateral: Your home serves as the security for the loan, which means the lender can take possession of the property if you fail to repay.
• Variable Rates: Most HELOCs have variable interest rates, meaning your monthly payments can change based on market conditions.
• Draw Period: There is typically an initial period (often 5–10 years) where you can borrow money and may only be required to pay interest.
• Repayment Period: After the draw period ends, you enter a repayment phase where you can no longer borrow and must pay back both the principal and interest.