A HELOC (Home Equity Line of Credit) is a home equity loan and functions much like a credit card. It’s essentially a line of credit that can be drawn on as you repay the total loan.
The interest rates on HELOCs are often variable and set on an index such as the prime rate.
- Things you should ask yourself before consider a HELOC:
- Should I borrow from home equity?
- If so, how much should you borrow?
- Will you be better served by taking out a lump-sum equity loan or a HELOC?
- How long will it take to repay the loan?