HELOC (Home Equity Line of Credit).
In plain English
A HELOC lets you borrow against the part of your home you actually own (your equity), the way a credit card lets you borrow up to a limit. You draw what you need during a set draw period, pay interest on only what you use, and the rate is usually variable, so it moves with broader interest rates. Because the loan is secured by your house, the rate is lower than an unsecured loan, but missing payments can put the home at risk.
01Why it matters
A HELOC is often the cheapest large pool of credit a homeowner can access, but the variable rate means the payment can climb when rates rise, and the house is the collateral.
02The math, step by step
On a home worth $400,000 with a $250,000 mortgage balance, you have $150,000 in equity. A lender might offer a HELOC up to roughly 85 percent of the home's value minus the mortgage, so about $90,000 here. You pay interest only on the portion you actually draw.
03What this is NOT
A HELOC is not the same as a home equity loan. A home equity loan hands you a lump sum at a fixed rate; a HELOC is a revolving line you draw from over time, usually at a variable rate.
04Receipts
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