What is a "home equity line of credit" (HELOC)?

A home equity line of credit (HELOC) is a financial product that allows homeowners to borrow against the equity in their home. It operates as a revolving credit line, meaning borrowers can access funds up to a predetermined credit limit and borrow or repay as needed, similar to how a credit card functions. The loan is secured against the value of the home, which typically means that the borrower can tap into the equity they have built up over time.

This flexibility makes a HELOC an attractive option for those who may need funds for various purposes, such as home improvements, education expenses, or debt consolidation. The line of credit is secured, which often results in lower interest rates compared to unsecured loans or credit cards. Furthermore, since the amount borrowed can fluctuate based on the borrower's needs, it provides homeowners with a useful tool to manage their finances efficiently.