What is a HELOC? A home equity line of credit (HELOC) is a secured loan tied to your home that enables you to access money as you need it. You'll have the ability to make as many purchases as you 'd like, as long as they do not exceed your credit line. But unlike a credit card, you risk foreclosure if you can't make your payments because HELOCs use your home as security. Key takeaways about HELOCs - You can use a HELOC to gain access to money that can be used for any purpose. - You might lose your home if you fail to make your HELOC's monthly payments. - HELOCs typically have lower rates than home equity loans but higher rates than cash-out refinances. - HELOC rates of interest vary and will likely change over the duration of your repayment. - You might be able to make low, interest-only monthly payments while you're making use of the line of credit. However, you'll have to begin making complete principal-and-interest payments as soon as you get in the payment period. Benefits of a HELOC Money is easy to use. You can access cash when you need it, in many cases simply by swiping a card. Reusable credit line. You can settle the balance and recycle the credit line as lot of times as you 'd like throughout the draw period, which generally lasts several years. Interest accrues just based on use. Your monthly payments are based only on the quantity you've utilized, which isn't how loans with a lump sum payout work. Competitive rate of interest. You'll likely pay a lower rates of interest than a home equity loan, individual loan or credit card can use, and your lending institution may provide a low initial rate for the first 6 months. Plus, your rate will have a cap and can only go so high, no matter what takes place in the broader market. Low month-to-month payments.

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