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The Home Equity Line of Credit (HELOC) is a Second Mortgage Loan that allows homeowners to borrow against the equity in their property. Home Equity Line Of Credit (HELOC) usually have adjustable interest rates based on the Primary Rate (published daily in Wall Street Journal) plus or minus a margin. Payments may vary every month and the borrower may pay only the interest on the loan every month until the maturity of the loan. At the maturity day the borrower must repay the whole principle amount at once if there is any.
The Home Equity Line of Credit allows you to obtain cash advances with a credit card or to write checks up to the predetermined credit limit as often as you need. The credit line stays open even if you don't carry any principal balance until the predetermined loan period.
- Benefits of Home Equity Line of Credit:
- Smaller payments or no payments if there is no balance,
- Interest may be tax deductible,
- Credit line is used as you need it and stays open even with no balance, so you can reuse it.
Another type of Second Mortgage Loan is the Home Equity Loan (HEL).
Read more about Home Equity Loan
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