A home equity line of credit (HELOC) is an open line of credit that uses the borrower’s home as collateral. This is different from a home equity loan in that, once a maximum loan limit has been established the available funds may be drawn at the homeowner’s discretion. A HELOC is generally in second lien position but can also be in first or occasionally third position.
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A HELOC typically has a variable rate and often times requires only a minimum monthly payment.