Home Equity Line of Credit (HELOC)

What is it?

A home equity line of credit (HELOC) is a loan that is secured by the equity you already have in your home, is sometimes referred to as a second mortgage. 

Advantages of a HELOC

  • You only pay interest on the amount you use. 
  • It gives you access to a large sum of cash. 
  • Interest rates are usually lower than they are on a first mortgage.  

Disadvantages of a HELOC

  • Your bank can freeze your HELOC if your home loses a large portion of its value. 
  • Interest rates are usually variable. 
  • There might be an annual fee to keep it open. 

Is it right for you?

HELOCs are a good option for people who:

  • have a big, one-time expense like college tuition or a remodel 
  • have steady, reliable income

Thinking about a HELOC? Use our monthly mortgage payment calculator to check your amortization schedule and estimate how much equity you have in your home. 

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