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Home Equity Line of Credit: Definition

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This type of credit uses your home equity as collateral. A home equity line of credit (HELOC) is good for you if you don’t want to take all the means at once. This option gives you a possibility to use the money, only when you really need it. The interests are also paid only on the borrowed amount.

The facts to be aware of is that the interest rate can be changed and your lender can cancel or close your HELOC, even if you have not used the money.

Once you receive an approval for a HELOC, you get access to the money source. The advantage is that you don’t need to pay interests until you actually take the money. You can use a payment card or a checkbook to use the money from your line of credit.