A HELOC (Home Equity Line of Credit) is a revolving line of credit secured by your home, allowing you to borrow money as needed up to a set credit limit, typically based on the equity you have in your property

. Unlike a traditional loan where you receive a lump sum, with a HELOC you can draw funds, repay them, and borrow again during the "draw period," which usually lasts about 10 years

. Key features of a HELOC include:

• Secured by your home: Your home acts as collateral, so failure to repay can lead to foreclosure

• Variable interest rates: Rates often fluctuate based on market benchmarks, and you pay interest only on the amount you borrow

• Flexible use: Funds can be used for large expenses such as home improvements, education, or debt consolidation

• Payment structure: During the draw period, you may make interest-only payments; after this period, you enter the repayment phase where principal and interest must be paid back, often over 10 to 20 years

• Credit requirements: Typically requires a minimum credit score around 620, a debt-to-income ratio under 43%, and a loan-to-value (LTV) ratio usually capped at 85% of your home's value

HELOCs offer lower interest rates compared to credit cards or personal loans and provide a reusable credit line, but the risk of losing your home if payments are missed is significant

. In summary, a HELOC is a flexible, home-secured revolving credit line that lets homeowners borrow against their home equity for various financial needs, with variable interest rates and structured repayment terms