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A home equity line of credit (often called HELOC and pronounced HEE-lock) is a loan in which the lender agrees to lend a maximum amount within an agreed period (called a term), where the collateral is the borrower's equity in his/her house.

A HELOC differs from a conventional home equity loan in that the borrower is not advanced the entire sum up front, but uses a line of credit to borrow sums that total no more than the amount, similar to a credit card. At closing you are assigned a specified credit limit that you can borrow up to. During a "draw period" (typically 5 to 25 years), HELOC funds can be borrowed and you pay back only what you use plus interest. Depending on how much you use the HELOC, you will have a minimum monthly payment requirement (often "interest only"); beyond the minimum, it is up to you how much to pay and when to pay. At the end of the draw period, you will have to pay back the full principal amount borrowed either in a lump-sum balloon payment or according to a loan amortization schedule.

Another important difference from a conventional loan the interest rate on a HELOC is variable based on an index such as prime rate. This means that the interest rate can - and almost certainly will - change over time. Homeowners shopping for a HELOC must be aware that not all lenders calculate the margin the same way. The margin is the difference between the prime rate and the interest rate the borrower will actually pay. Lenders do not generally offer this information and it is up to the consumer to ask for it before taking a loan.^{[citation needed]}

HELOC loans have become very popular in the United States in the 2000s, in part because interest paid is typically (depending on specific circumstances) deductible under federal and many state income tax laws. This effectively reduces the cost of borrowing funds and offers an attractive tax incentive over traditional methods of borrowing such as credit card debt. Another reason for the popularity of HELOCs is the flexibility not found in most other loans - both in terms of borrowing and repaying on a schedule determined by the borrower. Furthermore, HELOC loans' popularity growth may also stem from their having a better image than a "second mortgage," a term which can more directly imply an undesirable level of debt.^[1] Of course, within the lending industry itself, a HELOC is categorized as a second mortgage.

Heloc Subcategories Home Finance > HELOC > HELOC > > Heloc Articles How To Get A Fixed Rate HELOC Mortgage Quote? by Jimmy Chuang Dec 08, 2008 The equity in your home is like money in the bank, in fact you can use the equity in home just like a credit card account. This line of credit is called HELOC, home equity line of credit. To get a HELOC account you must first get fixed rate HELOC mor... Types of Creative Loans - Heloc Loans by Dwan Twyford Nov 12, 2008 Homeowners love HELOC loans – Home Equity Line Of Credit - because you only pay interest on what you borrow. For example – say you originally bought your property for $125,000. Over the years it has gone up in value - it’s now worth $200,000. I... Home Equity Lines of Credit (HELOC's) by Mark Kampfe Apr 30, 2008 Home Equity Lines of Credit (HELOC’s) have become a popular source of consumer credit and are being offered by more and more lenders in a variety of scenarios. Most loans come with varia... How To Never Get Ripped-Off When Getting A Mortgage by louie frias Jan 03, 2008 It's no secret how many Americans are losing or are about to lose their precious piece of the "American Dream." They're about to be homeless because of the "smoke and mirror" tactics shrouding the mortgage industry. I'm going to blow the lid CLEAN OF... Finding Equity Lenders and Loans by Christian Okoye Nov 30, 2007 Equity lenders and loans are becoming more popular among the people of the society. Most of homeowners are applying for home equity loans to pay off credit cards, school bills, debt consolidation, and even applying to remodel their home among others... What is a HELOC? by Christian Rios Oct 19, 2007 What exactly is a HELOC? Let’s first define what those letters stand for: Home Equity Line of Credit or Home Equity Line. This type of loan allows the borrower to write checks or pull cash out against their home equity up to a certain, predetermined ... American Mortgage And Real Estate Group Launches New California HELOC Advantage Program With 3.99% R by Vladimir Rozumniy Oct 10, 2007 There are many things that you probably want to do with your life and simply aren’t able to do because of money. Think about where you live now – are the improvements that you’d like to make but are putting off because of money? Would you like to mak... Choosing HELOC Over Equity Loans by Ajeet Khurana Sep 28, 2007 It is easier to get loans if one owns property than if one does not. One can easily obtain secured loans by using the house as collateral. Moreover, secured loans are a lot more affordable than the unsecured variety. Those who have no mortgages to pa... Power Tools of Savvy Homeowners by David Newby Sep 05, 2007 Power Tools of Savvy Homeowners (by David Newby) For centuries, the prevailing wisdom regarding your home mortgage has been to “pay it off as soon as possible.” With 9 out of 10 Americans retiring broke in the richest country on Earth, it may be ti... Bad Credit Equity Line or Home Loan? by Mike Hamel Aug 10, 2007 When deciding whether to take out an equity line or a home loan, CNNMoney advises consumers to consider their goals, payment schedule, spending habits and risk tolerance. “A HELOC … gives you more repayment flexibility and lets you borrow onl...