What Is a Home Equity Line of Credit (HELOC) in Real Estate?
A home equity line of credit (HELOC) lets you borrow against your home’s equity as needed, similar to a credit card. It offers flexibility to draw and repay funds during a set period — often 10 years — followed by a repayment term.
✅ How a HELOC Works
A HELOC provides revolving access to funds based on your available equity and credit score. You can borrow, repay, and borrow again within the draw period, typically at a variable interest rate.
- Revolving credit line secured by your home
- Interest rate tied to the prime rate
- Ideal for renovations, tuition, or debt consolidation
💡 HELOC vs. Home Equity Loan
Both a HELOC and a home equity loan use your home as collateral, but they differ in how you access funds.
- HELOC: revolving line of credit with variable rates
- Home equity loan: lump-sum with fixed rates
- HELOCs offer flexibility; loans offer predictability
📉 Pros and Cons of HELOCs
- ✅ Access cash when needed without reapplying
- ✅ Interest-only payments during draw period
- ❌ Variable rates can increase payments over time
- ❌ Your home is collateral — missed payments risk foreclosure
Compare a HELOC with refinancing or a mortgage recast to see which option best fits your goals.
🏡 Thinking of selling instead of borrowing against your equity?
List Your Home with Brokerless