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Definitions of Home Equity Line of Credit

• A home equity line of credit is a secured line of credit. It is secured by the equity that the lender believes is in your home. It is usually a simple interest loan with a variable interest rate. The interest rate moves with the market and adjusts at predefined times (once a year or every six months etc.) indicated in your loan documents. Your credit limit is the amount of equity the lender will allow you to use. There is usually a minimum payment required per month. It changes based upon the principal balance and the interest rate that you currently have, much like a credit card. Other terms referring to a home equity line of credit would be HELOC (an acronym), line of credit, equity line of credit.