What's a HELOC?
"HELOCs are how smart homeowners get fast, low interest money on demand."
-Mr. Heloc
H.E.L.O.C. stands for Home Equity Line of Credit. It is a credit line secured by the equity in your home. You can use a HELOC to provide cash as needed for a vacation, home improvement, bill consolidation, school tuition or whatever else you like. There is a pre-set limit, but you can write yourself a loan whenever you need it. The money is available for whatever you want and the payments are determined only on the amount of funds that are drawn.
HELOCs have a draw period, when the borrower can use the credit line, and a repayment period when it must be repaid. Draw periods are usually 5 to 10 years, during which the borrower is only required to pay interest. Repayment periods are usually 10 to 20 years.
Because it is a loan set up for a maximum draw, rather than for a fixed dollar amount, many people find that a HELOC is very convenient for funding intermittent needs. A HELOC is a useful, versatile, and reusable financial tool.
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