Home Equity Line Of Credit - HELOC
 |
Definition of 'Home Equity Line Of Credit - HELOC'A line of credit extended to a homeowner that uses the borrower's home as collateral. Once a maximum loan balance is established, the homeowner may draw on the line of credit at his or her discretion. Interest is charged on a predetermined variable rate, which is usually based on prevailing prime rates.Once there is a balance owing on the loan, the homeowner can choose the repayment schedule as long as minimum interest payments are made monthly. The term of a HELOC can last anywhere from less than five to more than 20 years, at the end of which all balances must be paid in full. |
 |
Investopedia explains 'Home Equity Line Of Credit - HELOC'Several factors can lead to strong growth rates in this type of borrowing:-Increased retail sales channels, which have brought HELOCs to the masses. Most of these sales channels come from local banking institutions. -Rising home values, which increase the amount of equity available to homeowners -Prevailing low interest rates coupled with moderate inflation -The fact that mortgage interest is often tax-deductible, making it more attractive than alternative borrowing methods Because HELOC interest is variable, homeowners must be aware of prevailing interest rates -a spike can cause repayment balances to rise rapidly. |
Related Definitions
Articles Of Interest
-
The Importance Of Your Credit Rating
A great starting point for learning what a credit score is, how it is calculated and why it is so important. -
How HELOCs Can Hurt You
A home equity line of credit is a convenient way to borrow money. But, there are things to be cautious about before you get into trouble. -
Reverse Mortgage Pitfalls
Before tapping your home equity, find out what can go wrong. -
Home-Equity Loans: What You Need To Know
We shed light on why consumers decide to use this form of debt and whether it is a good alternative. -
Is A Reverse Mortgage Right For You?
Home equity can be a viable financing alternative, but it depends on how you spend the funds. -
Is it wise to consolidate credit card debt?
In most cases, credit card consolidation is a wise decision if you are able to get a lower interest rate with the new company at no or minimal cost to you. A credit card balance of $15,000 with ... -
Equity Stripping Leaves Creditors Empty-Handed
Add additional debt to your real estate assets to keep the creditors at bay. -
Protect Yourself From HELOC Fraud
Identity thieves are using home equity lines of credit to commit their crimes. -
What does a cut in interest rates mean for the stock market?
When the next Federal Reserve meeting is expected to bring interest rate cuts or increases, it is wise, as a stock investor, to be aware of the potential effects behind such decisions. Although ... -
How To Properly Research For The Best Mortgage Rate
You’ve probably been told to shop around for the best rate, but what exactly does that entail? Find out how to ensure you're getting the best possible rate on your mortgage.
Free Annual Reports