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 Line of Credit Works
A line of credit is an arrangement where a bank offers a maximum loan amount that the borrower can draw upon at any time. The borrower – which can be an individual, business or government ...
Free Annual Reports