Definition
A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home's equity, functioning similarly to a credit card. During the draw period (typically 10 years), you can borrow, repay, and re-borrow up to your credit limit, paying interest only on the outstanding balance. After the draw period, the repayment period begins (typically 10-20 years) and you can no longer draw funds. HELOC rates are typically variable, based on the prime rate.
Related Mortgage Terms
- Equity
The difference between your home's current market value and the remaining mortga...
- Home Equity Loan
A second mortgage that allows homeowners to borrow against their equity in a lum...
- Interest Rate
The cost of borrowing money, expressed as a percentage of the loan amount charge...
- Amortization
The process of paying off a mortgage through regular monthly payments of princip...
- Annual Percentage Rate (APR)
The total annual cost of a mortgage expressed as a percentage, including the int...
Understanding mortgage terminology helps you compare loan offers and make informed decisions. Use our mortgage calculator to see how these terms affect your monthly payment.