What is A Home Equity Line of Credit Or HELOC?

HELOC stands for Home Equity Line Of Credit. It means that you can take money on credit using your house as collateral. It is similar to how a credit card operates except that while credit card debt is unsecured, a HELOC loan is secured. If you do not pay the HELOC loan back, the lender can take away your home as a means to settle. Because it is a secured debt and because the security is a house, the limit that you can withdraw is also usually much higher than a credit card.

A HELOC should be considered only with grave reservations. Other kinds of loans should be considered such as personal loans, Credit card loans etc. before thinking of HELOC as an option simply because you are putting your home on the line.

It is also possible to take out a line of credit in a home while you are still making mortgage payments on it. This is usually done for the purpose of consolidating other kinds of debts. If the lender calculates that over time you have built up equity in the home, then he may extend you a line of credit based on the built up equity.

Please do some serious thinking and take the advice for a sound finance professional to consider options before you consider HELOC as an option for you. There may be other ways for you to come up with the money that you need without putting your home at risk.