What is a Home Equity Line of Credit (HELOC)?
A home equity line of credit (HELOC) uses the equity on your home as collateral to open a second mortgage. This is a line of credit that works like a credit card and is different from a home equity loan because you can borrow funds as you need them – often you can borrow money later without having to reapply for another loan. To access these funds, banks may offer online transfers, checks, or a credit card connected to the account.
How Long Does a HELOC Last?
Typically, a Home Equity Line of Credit lasts 10 years. It can be used over time for smaller home-improvement projects or for large purchases, similar to a traditional credit card. The interest rate on a HELOC is variable and payments can be extended for up to 30 years.
How is a Home Equity Line of Credit different from a Home Equity Loan?
A Home Equity Loan is a one-time lump-sum payment, often used for a specific project like remodeling or large home improvement projects. Like other traditional loans, you begin making fixed monthly payments on the loan right away.
At People’s Community Federal Credit Union, we offer variable-rate Home Equity Line of Credit. We charge no annual fee and have low closing costs.