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.