HELOC

1. A Home Equity Line of Credit (HELOC) is a type of revolving credit that is secured by the equity in a homeowner’s primary residence. A homeowner will utilize the funds from a HELOC for whatever purpose they choose, such as home improvements, debt consolidation, education expenses, or emergency funds than the remaining balance on your mortgage. 

2. Credit Limit: The lender will approve you for a specific credit limit, which is typically a percentage of your home's equity. This limit can vary depending on the lender, but it's usually around 85% of the home's appraised value minus the outstanding mortgage balance. 

3. Draw Period: HELOCs typically have a draw period, which is a set number of years (often 5-10). During this period, you can borrow money up to your credit limit as needed. You can use the money for various purposes, such as home improvements, debt consolidation, or other expenses. 

4. Repayment: During the draw period, you only need to make interest payments on the amount you've borrowed. These payments can be interest-only or you can choose to make additional payments to reduce the principal.

 5. Repayment Period: After the draw period, you enter the repayment period, which can last for another 10-20 years. During this period, you can no longer borrow additional funds, and you must start repaying both principal and interest. 

6. Variable Interest Rate: HELOCs usually have variable interest rates, which means the interest rate can change over time, often based on a benchmark such as the prime rate. This can make your monthly payments fluctuate. 

7. Secured Debt: A HELOC is a secured debt, which means your home is used as collateral.