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Home equity line of credit
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What is a HELOC loan?
Characteristics of HELOCs HELOC stands for home equity line of credit, or simply home equity line. It is a loan set up as a line of credit for some maximum draw, rather than for a fixed dollar amount. For example, using a standard mortgage you might borrow $150,000, which would be paid out in its entirety at closing.
What happens to a HELOC when you sell a house?
Should you want to relocate, and the home decreases in value, you might end up losing money on the sale of the home or be unable to move. A home equity line of credit (HELOC) is a revolving credit line. A HELOC allows the borrower to take out money against the credit line up to a preset limit, make payments, and then take money out again.
Can you get a second mortgage with a HELOC?
One of the biggest perks of homeownership is the ability to build equity over time. You can use that equity to secure low-cost funds in the form of a second mortgage 鈥攅ither a one-time loan or a home equity line of credit (HELOC).
What is a home equity loan?
A home equity loan comes as a lump sum of cash, often with a fixed interest rate. A home equity line of credit is a revolving source of funds, much like a credit card, that you can access as you choose. Home equity loans and HELOCs use the equity in your home鈥攖hat is, the difference between your home鈥檚 value and your mortgage balance鈥攁s collateral.