A Home Equity Line of Credit — a revolving line of credit secured by your home equity that you can draw from as needed.
Full Definition
A HELOC works like a credit card backed by your home equity. During the draw period (usually 5–10 years), you can borrow up to your credit limit, repay, and borrow again. You only pay interest on what you draw. After the draw period ends, the repayment period begins (typically 10–20 years) and you can no longer draw new funds. HELOCs usually carry variable interest rates tied to the prime rate, which means your payments can change. They're popular for home improvements, debt consolidation, and covering large, unpredictable expenses. Your home is collateral, so defaulting risks foreclosure.
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