Hey,
One of the biggest upsides of owning property is that over time, equity can be built. This equity can be used to secure low-cost funds in the form of a one-time loan or home equity line of credit (HELOC). I will share with you HELOC loan meaning and its advantages. Keep reading to know more.
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What is a HELOC loan?It is a loan wherein the borrower gets a revolving credit line. The loan is divided into two parts: the draw period ( the period wherein the borrower can withdraw funds) and the repayment period ( the period wherein the borrower has to repay the loan amount).
The borrower gets to take money against the preset credit limit. The borrower can tap into the credit line as many times until the end of the term/draw period.
During the draw period, the borrower has to make a payment on the interest.
HELOC is secured by the equity in an asset like property. It has a variable interest rate, which means that the rate can either increase or decrease over time.
What is better a HELOC or home equity loan?Home equity loans are a second mortgage with fees and payments that are issued separately from the first mortgage. It is similar to conventional mortgages and has a rigid structure.
I believe HELOC is a better loan option because of the flexible payment schedule. The biggest advantage of HELOC loans is that the borrower gets to tap into the credit line as needed. A few other pros of HELOC loans are:
Variable interest rates
Credit lines are available for emergencies and variable expenses.
The lower interest rate in comparison to the home equity loan
I hope my explanation has cleared your doubts about HELOC loan meaning.
Read more:
Does heloc require appraisal
What happens when home equity line of credit expires
How does HELOC affect credit score?
Which is better HELOC or home equity loan?
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What is a HELOC loan?
Sahil
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2 Year
2022-12-21T16:48:51+00:00 2022-12-21T17:10:43+00:00Comment
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