Your Homes Hidden Financial Planning Tool

The Home Equity Line of Credit, sometimes referred to by its acronym HELOC, is a variation of the home equity loan. In most cases, both the HELOC and home equity loan are typically second mortgages.

The line of credit is a cross between a mortgage loan and a credit card. Instead of providing the borrower with a check for the loan sum, the line of credit provides the borrower with a check book, which taps into a mortgage loan. This article explores the two opportunities that HELOCs offer to homeowners:

  • Financial Planning Tool
  • Investment Tool

After the closing, the homeowner with a line of credit can write checks against the credit line established by this type of financing. There is usually no restrictions on the usage of the funds. As long as the borrower is not in default with his or her HELOC, the borrower will not have to obtain any lender approval before writing a check.

This credit line is still a legally recorded mortgage lien. However, the actual principal balance will increase or decrease according to how much the homeowner takes out or pays back.

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Real Estate 101

Real Estate 101

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