Loan types
A HELOC for equity you may need over time.
A HELOC is a line of credit secured by your home. During the draw period you can borrow, repay, and borrow again, up to the credit limit.
Who it is for
- Homeowners who want access to equity without taking it all on day one
- Projects, tuition, or reserves where the timing of the expense is uneven
- Owners who want to keep an existing first mortgage in place
How it usually works
- The rate is usually variable and tied to an index. The payment can change.
- A draw period is followed by a repayment period, when the line often locks and the payment rises.
- The house is the collateral. Missed payments can put the home at risk. A HELOC is a mortgage, even when it feels like a credit line.
What to have ready
- Current mortgage statement
- An estimate of the home's value
- Income documents
- A sense of how much access you actually need
Guidelines change, and lenders add their own rules. The description above is a starting point, not a quote and not an approval.