A Home Equity Line of Credit (HELOC) is a revolving credit line that lets you borrow against the equity in your home, similar to how a credit card works—except your home is the collateral. You can withdraw funds as needed during a set “draw period,” repay, and borrow again without reapplying.
Benefits of a HELOC:
- Flexibility: Borrow only what you need, when you need it—great for ongoing projects or unexpected expenses.
- Lower Interest Rates: Typically lower than personal loans or credit cards because it’s secured by your home.
- Pay Interest Only on What You Use: Unlike a lump-sum loan, you’re only charged interest on the amount you withdraw.
- Multiple Uses: Fund home improvements, consolidate debt, cover education costs, or use for major purchases.
- Potential Tax Deduction: Interest may be tax-deductible if used for qualifying home improvements (consult a tax advisor).
- Boost Home Value: Using it for renovations can increase your property’s worth, creating more equity.