To understand a home equity line of credit (HELOC), it is where you can borrow a certain maximum amount of money under an agreed time period. In simpler terms, HELOC functions like a credit card where you can borrow money for a certain period only but pay the loan by the end of the month. With HELOC, you will be given something similar to a credit card by your lender which will give you easier access to your money.
When does HELOC come in handy?
A HELOC is helpful if you own a house and need to borrow money to improve it, but is not sure how much you will exactly need. For example, when you are planning to do some repairs and fixes in your bathroom, your HELOC will help cover the overall costs of materials, labor, and other services that you will need for such project. The amount that you have incurred will reflect when it is time to pay the bills.
HELOC Paying Process
When it comes to paying off a HELOC, you can borrow more money once an amount has been paid. When you receive a certain HELOC amount, you can spend the extra for whatever work you want done at your home. Just borrow the extra money and pay when the time comes. Also, take note that the interest rates may increase and decrease from time to time depending on the economic activity of your area.