Home Equity Loans & Home Equity Line of Credit (HELOC)

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FLORIDA REAL ESTATE SALES ASSOCIATE COURSE

Types of mortgages

Section 23 of 72

Home equity loans allow homeowners to borrow money using the equity they have built up in their property as collateral. A specific and popular version of this is the Home Equity Line of Credit, or HELOC. Unlike a standard loan where the borrower receives a lump sum of cash, a HELOC functions more like a credit card. The lender approves a maximum credit limit, and the borrower can draw money out, pay it back, and draw it out again as needed during a set "draw period." The borrower only pays interest on the money they have actually used, making it a flexible tool for funding renovations or consolidating debt.