A HELOC is a second loan on your home. The lender sets a credit limit based on your equity, and during the draw period you borrow only what you need and pay interest only on what you use. The rate is usually variable.
Why it matters
It leaves your first mortgage, and its rate, untouched, which can matter a lot if that rate is low. Because your home secures it, borrowing more than you can repay puts the home at risk.
Where you meet it
For renovations, college costs or a cushion for emergencies. Our guide cash out refinance vs HELOC compares the two ways to use your equity.
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