A Home Equity Line of Credit (HELOC) is a line of credit loan that is secured by the borrower’s property. A HELOC will have an approved amount and can typically be broken down into two periods – a draw period and repayment period. During the draw period, a borrower can draw on the HELOC balance without exceeding the approved amount. Payments are still required during the draw period. After the draw period ends, the loan enters a repayment period where a borrower can only pay on the loan without drawing on the line of credit. A HELOC is typically an interest-only loan during the draw period and can either be a one-time balloon or amortized payment during the repayment period. Consult with a mortgage loan officer to find the best option for you.
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