HELOC

Intro to HELOCs and HELOANs

A home equity loan or HELOC allows homeowners to borrow against the equity in their home, using the property as collateral.

Home Equity Loan

• Lump-sum loan with a fixed interest rate
• Full amount received upfront
• Repaid through regular monthly installments over a set term
• Interest may be tax-deductible when used for home improvements

Home Equity Line of Credit (HELOC)

• Revolving line of credit with a variable interest rate
• Borrow as needed during the draw period
• Payments depend on the outstanding balance
• Credit line becomes reusable as it’s repaid
• Interest may be tax-deductible for home improvement uses

Who Are HELOCs and Home Equity Loans Best For?

• Homeowners with significant equity (typically 20–30% or more)
• Home improvement projects where interest may be deductible
• Debt consolidation to replace high-interest debts
• Education expenses, often at lower rates than private loans

Benefits of Home Equity Loans & HELOCs

• Lower interest rates than credit cards or personal loans
• Flexible use of borrowed funds
• Possible tax deductions for qualified uses
• Predictable payments with fixed-rate loans
• Can help build home equity, especially when improving property value

Important Considerations

• These products use your home as collateral, creating foreclosure risk if unpaid
• Tax deductibility varies—consult a tax professional
• Compare terms, interest rates, and repayment ability before proceeding