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.
A home equity line of credit is a popular choice for borrowers because they:
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.
It is fairly easy to understand why so many people at age 18 to 34 do
Insurance agents suggest to visit your primary care physician before shopping for