• Advertiser Disclosure

    You’re our first priority.
    Every time.

    We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

    So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.

  • Home Equity Line of Credit (HELOC)

    What is a Home Equity Line of Credit?
    A Home Equity Line of Credit, or HELOC, uses your home equity as collateral. A HELOC offers a line of credit from which you can draw as needed, as opposed to a typical home equity loan which gives you the entire amount of the loan up front. You can pull money from your line of credit during a specified “draw period” (usually between 5 and 25 years), paying back only the money you use plus interest.

    When this draw period ends, you repay the loan’s principal either in one lump sum or according to a payment schedule. Since your home provides collateral for the loan, failure to honor a repayment agreement could result in foreclosure. Since the interest rate on a HELOC is tied to economic indexes such as the prime rate, it is variable and will change over the life of your loan.

    Why Choose a HELOC? A home equity line of credit is a popular choice for borrowers because they:

    Offer large amounts of cash at relatively low interest rates May allow you to deduct the interest paid from your taxes, depending on your specific financial situation Can be a flexible way to borrow on demand and repay on your own schedule How to Get a HELOC Getting a HELOC is similar to getting a first mortgage, but less rigorous and time-consuming. However, you shouldn’t rush the research before signing on the dotted line. Consult with a variety of lenders to make sure you’re getting the lowest rates you can, being sure to compare the annual percentage rate (APR), which tells you the cost of credit on a yearly basis. While shopping around, make sure you also compare other associated loan expenses such as points and closing costs.


    We use cookies to give you the best online experience. By agreeing you accept the use of cookies in accordance with our cookie policy.

    Skip to toolbar