People looking for a source of cash to finance home renovations, investments, school tuition, or to buy a new property can turn to a home equity line of credit, a loan that relies on a home as collateral and offers lower, variable interest rates.
Home Equity Line of Credit Definition
A home equity line of credit, also known by the acronym "HELOC," is a loan that relies on a home or other property as collateral. If a borrower defaults on paying back the loan, the bank or other lender can seize the property in place of the money they are owed.
Home equity lines of credit allow homeowners to borrow money at a lower rate than an unsecured loan, and to withdraw that money on a credit line that operates similarly to a credit card.
