Mortgage glossary
HELOC
Definition: A HELOC, or home equity line of credit, is a revolving credit line secured by your home that lets you borrow against equity as needed, typically with a variable rate.
A HELOC usually has a draw period, when you can borrow and often pay only interest, followed by a repayment period when the balance is paid down. Unlike a cash-out refinance, it leaves your first mortgage in place, which can matter if that first loan has a low rate.
Texas regulates homestead HELOCs under its constitution. Combined borrowing against a Texas homestead is generally limited to 80% of the home's value, and there are required notice and waiting periods before closing. HELOCs are commonly used for renovations, debt consolidation or as a reserve.
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Reviewed by Kyle Richardson, NMLS #863464. General information, not advice for your specific situation. All glossary terms
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