Home Equity Line of Credit (HELOC)

A HELOC is a type of second mortgage that allows you to borrow money against the equity in your home as a line of credit. You can use the equity in your home to pay for whatever you need, such as home improvements, education, and consolidating credit card debt.

There are two phases: the draw period and the repayment period. The draw period means that your line of credit is open and available for you to use. During the draw period, you must only make interest payments on any borrowed money. Once you reach the end of your draw period, you’ll have to make repayments based on your principal and remaining interest. Most HELOCs have variable interest rates, meaning they fluctuate based on the changes in the market.