A Home Equity Line of Credit (HELOC) allows you to borrow against your home's equity with a revolving credit line. Unlike a traditional loan, you only pay interest on the amount you actually use.

How HELOCs Work

• Draw Period: Typically 10 years where you can borrow and make interest-only payments
• Repayment Period: Typically 20 years where you pay back principal plus interest
• Variable Rates: Most HELOCs have adjustable rates tied to prime rate
• Revolving Credit: Can reuse available credit during draw period

Common Uses

• Home improvements and renovations
• Debt consolidation
• Emergency fund
• Education expenses
• Investment property down payment

Important Considerations

• Your home serves as collateral
• Variable rates can increase payments
• Payment shock when entering repayment period
• Some HELOCs have prepayment penalties
• May have minimum draw requirements