HELOC
A Home Equity Line of Credit (HELOC) is a flexible loan option for homeowners, allowing them to borrow against the equity in their property. Operating like a revolving line of credit, a HELOC comes with a predetermined credit limit based on the home’s appraised value minus the existing mortgage balance. During the draw period, typically 5 to 10 years, borrowers can access funds as needed using checks, credit cards, or online transfers. Subsequently, a repayment period, lasting 10 to 20 years, follows the draw period. Monthly payments, which can be principal and interest or interest onlu, fluctuate based on the outstanding balance and variable interest rates often tied to benchmarks like the prime rate. HELOCs offer versatility in fund utilization, such as home improvements or debt consolidation, and may have tax-deductible interest in certain cases, depending on the purpose.