HELOC & Home Equity Questions

A home equity line of credit (HELOC) lets you borrow against available equity in your home up to an approved limit. During the draw period, you can generally borrow as needed and repay what you use. After that comes the repayment period, when you can no longer draw and payments may increase as you pay back the balance. HELOC rates are often variable, so the rate and payment can change. You typically have an interest only period which is your draw period, then you will have a principal and interest period after that.

For example, you might use a HELOC for home improvements or as part of a buy before you sell plan. Before opening one, compare its rate, draw and repayment terms, fees, and what happens if you pay it off shortly after opening.