Home equity line of credit

A HELOC is not a one-time lump-sum loan. It is a line of credit tied to the home. During the period the contract allows draws, the borrower can use available credit, pay it down, and use it again. A home equity loan, by contrast, is typically a closed-end amount borrowed at once. Both can be secured by the same property. They are not the same product.

Consumer glossaries describe a HELOC as a line of credit secured by the borrower’s home. HELOC is the acronym for this product, not a different product.

Profiles and product language often say HELOC. Readers need the expanded concept and a clean split from a home equity loan.

Casey opens a HELOC, draws funds for a renovation, later pays the balance down, and then draws again within the remaining available credit. That revolving pattern is the line-of-credit idea, not a second first mortgage.

• Equity
• Second mortgage

• Home equity loan

Related mortgage FAQ: What is the difference between a home equity loan and a HELOC?

HELOC is the usual acronym for a home equity line of credit, not a different product.