A home equity line of credit (HELOC) is a financial tool that allows homeowners to borrow money against the equity they have built up in their homes. HELOCs are secured loans, meaning they’re backed by the value of the borrower’s home. This makes them a lower-risk loan for lenders, which typically results in lower interest rates than unsecured loans. For example, if a homeowner has a home worth $200,000 and owes $100,000 on their mortgage, they may be able to access a HELOC for up to $100,000.
HELOCs are a popular way for homeowners to access cash for a variety of purposes, such as home improvements, debt consolidation, and education expenses. They offer several benefits, including low interest rates, flexibility, and tax deductions. In recent years, HELOCs have become increasingly popular due to rising home values and historically low interest rates.
