Draw on your funds as-needed
The equity you have in your home is the market value of your home minus the amount you still owe.
A HELOC is a revolving account secured by the equity you have in your property. Instead of receiving funds in one lump sum payment, as you would with a Home Equity loan, funds can be drawn on an as-needed basis, allowing homeowners to access the equity in their home up to the maximum line of credit. Interest-only payments are required until the payment period has expired. Lenders typically provide borrowers with a checking account or credit card to access the funds in their equity line.
A HELOC is a good idea if you don’t have a large expense to put your funds towards, but you still want to access the equity in your home. Many homeowners choose this option to pay off other debts with a higher interest rate, but this must be done very carefully to avoid a downward spiral of debt. It’s important to understand that you will pay interest and fees and that you are reducing the amount of equity available in your home.