Definition
A revolving line of credit secured by your home’s equity. It works much like a credit card, letting you borrow as needed up to a set limit.
What to consider
- Use it for flexible expenses like renovations or emergencies.
- Keep track of your borrowing so you don’t exceed your limit.
- Watch for interest rate changes that might affect payments.
Real world scenarios
- Claire opens a HELOC to remodel her bathroom, withdrawing only what she needs to keep interest costs low.
- Surprised by a job layoff, Kent uses a portion of his HELOC as a buffer until he secures new employment.
- Regular HELOC statements help Mila track balances and maintain discipline, preventing excessive borrowing against her home.
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