home equity
Tap Into Your Home's Equity Using a HELOC
A HELOC is a revolving line of credit secured by your home equity. Lenders set a credit limit based on appraised value minus your mortgage balance. You draw funds during a draw period, then repay principal and interest during the repayment period, often at a variable rate.
Published March 11, 2024
How does a HELOC work?
During the draw period you can withdraw up to your credit limit and may make interest-only payments. After the draw period ends, you enter repayment on both principal and interest.
HELOCs typically carry variable rates, though some lenders offer fixed-rate options. Uses include home improvements, education, or consolidating higher-interest debt. Always weigh risks because your home secures the loan.
FAQ
Tap Into Your Home's Equity Using a HELOC: FAQ
- Is a HELOC better than a cash-out refinance?
- It depends on your current mortgage rate, how much you need, and how long you will carry the balance. A local lender and your REALTOR® can help you compare total cost. Kathryn Cole connects clients with trusted Springfield-area lenders.