What is a Home Equity Line of Credit

A Home Equity Line of Credit (HELOC) is a type of secured loan used to make home improvements or pay off debt. A line of credit (LOC) is a form of revolving credit in which the borrower has access to a set amount of money but does not receive all of it at the time of closing.


Monthly payments on a HELOC consist solely of interest, calculated at a variable rate. The borrower is not required to make any payments beyond the interest.


The key advantage is that it gives the borrower more freedom by giving them access to equity.


As the HELOC has a variable interest rate, rate fluctuations are a potential problem.

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