Home Equity Line of Credit Definition: Home equity lines of credit, or HELOC, is a loan secured against a borrower’s property or home. A HELOC is basically a loan taken against the equity on a home, the value of which is the difference between a home’s current market value and a mortgage loan.
If a homeowner has made enough payments towards their mortgage so that they have sizable equity, they can usually borrow up to 80% or 85% of this total. When a HELOC is approved, the home is considered collateral, and the home equity line of credit can be used to finance renovations, pay off credit cards, and other unsecured debt.
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