What is a HELOC?
May 12, 2023
Author: Sabrin Baker, LLC,REALTOR ®
A HELOC, or home equity line of credit, is a type of loan that allows you to borrow money against the equity in your home. Equity is the difference between the value of your home and the amount you owe on your mortgage. If you have built up significant equity in your home, you can use a HELOC to finance a variety of expenses, such as:
- Home improvements
- Debt consolidation
- Major purchases
- Retirement expenses
HELOCs have a number of benefits, including:
- Flexible repayment terms
- Competitive interest rates
- No prepayment penalties
However, there are also some risks associated with HELOCs, such as:
- Variable interest rates
- Late payment fees
- Foreclosure
It is important to weigh the benefits and risks of a HELOC before you decide if it is the right loan for you. If you are considering a HELOC, be sure to talk to a lender to get more information and to get pre-approved for a loan.
