What Is a Home Equity Line of Credit?
One of the most compelling reasons to own a home is the equity you’ll build in it over time. As the value of the house increases and your mortgage balance decreases, the difference becomes wealth with which you can do as you please — kind of. In other words, the difference between what your house is worth and how much you owe on it is basically your money. You can borrow against that value, you can sell the house and keep the difference, or you can use it as a sort of a revolving “charge account” — a home equity line of credit (HELOC). Here’s how it works. Home Equity Loan vs HELOC While both home equity mechanisms allow you to borrow against the value you have in your home, the home equity loan is granted in one lump sum. Meanwhile, the HELOC works more like a charge card...