A HELOC is a revolving home-equity credit line secured by the property, usually in a second-lien position.
A home equity line of credit, often called a HELOC, is a revolving home-equity credit line secured by the property, usually in a second-lien position.
A HELOC matters because it gives homeowners flexible access to equity instead of one fixed lump sum. That can be useful when borrowing needs are uncertain or spread over time.
It also matters because the flexibility comes with complexity. Borrowers need to understand that a revolving secured credit line behaves differently from both a fixed home equity loan and a refinance.
Borrowers consider a HELOC after they already own the home and want access to equity while keeping the original first mortgage in place.
The term becomes most practical when the borrower is comparing revolving access to equity against a fixed lump sum or a first-mortgage replacement.
A homeowner opens a credit line secured by the home and draws only part of the approved amount at first, leaving the rest available later. That structure is a HELOC.
HELOC differs from a Home Equity Loan because the HELOC is revolving, while the home equity loan is usually advanced as a lump sum.
It also differs from a Cash-Out Refinance because a HELOC usually adds a second lien rather than replacing the first mortgage.