Home Equity Line of Credit
What is a home equity line of credit?
A home equity line of credit, or HELOC, is a second mortgage that gives you access to cash based on the value of your home. (It can also be a primary mortgage if you own your home outright.) You borrow against your equity, which is the home’s value minus the amount you owe on the primary mortgage. You can usually borrow up to 85% of your equity, though this varies by lender.
You can draw from a home equity line of credit and repay all or some of it monthly, somewhat like a credit card. Unlike a credit card, however, HELOCs are not intended for minor expenses.
When you’re shopping around for a loan, borrowing from the equity in your home will often get you the best rate.