A home equity line of credit, also known as a HELOC, is a line of credit secured by your home that gives you a revolving credit line to use for large expenses or to consolidate higher-interest rate debt on other loans such as credit cards. This is a 2nd lien on your property that will allow you to borrow exactly what you need, typically for lower rates than other forms of credit, and you only pay interest on what you borrow. A HELOC is a variable interest rate that adjusts when the Prime Rate adjusts so your payments can increase or decrease depending on the current market conditions. Typically, during the first 10 years you have access to the credit line up to the credit limit called the "draw period". This gives you the ability to draw against the line or pay the line down. Once the draw period is completed it will convert to a repayment schedule typically requiring the amount due at that time to repay the amount owed within a 20-year period.
