Home Equity Loans

A home equity line of credit works like a credit card against the equity on your house. You may borrow available funds up to the maximum limit on your credit line. The interest rate on a HELOC (home equity line of credit) is variable and changes based on the index it is tied to, such as the prime interest rate shown in the Wall Street Journal or other financial reports. Your interest rate adjusts when the index changes. During the first 10 years your minimum payments are interest-only. At the end of this period, the outstanding balance of your HELOC (home equity line of credit) is due and payable. Since there is this period where you can no longer borrow and must pay it back if differs from a credit card so you cannot stay in debt.