<Table> <Tr> <Td> </Td> <Td> The examples and perspective in this article deal primarily with North America and do not represent a worldwide view of the subject . You may improve this article, discuss the issue on the talk page, or create a new article, as appropriate . (October 2011) (Learn how and when to remove this template message) </Td> </Tr> </Table> <Tr> <Td> </Td> <Td> The examples and perspective in this article deal primarily with North America and do not represent a worldwide view of the subject . You may improve this article, discuss the issue on the talk page, or create a new article, as appropriate . (October 2011) (Learn how and when to remove this template message) </Td> </Tr> <P> A home equity line of credit (often called HELOC, pronounced Hee - lock) is a loan in which the lender agrees to lend a maximum amount within an agreed period (called a term), where the collateral is the borrower's equity in his / her house (akin to a second mortgage). Because a home often is a consumer's most valuable asset, many homeowners use home equity credit lines only for major items, such as education, home improvements, or medical bills, and choose not to use them for day - to - day expenses . HELOC abuse is often cited as one cause of the subprime mortgage crisis . </P> <P> A HELOC differs from a conventional home equity loan in that the borrower is not advanced the entire sum up front, but uses a line of credit to borrow sums that total no more than the credit limit, similar to a credit card . HELOC funds can be borrowed during the "draw period" (typically 5 to 25 years). Repayment is of the amount drawn plus interest . A HELOC may have a minimum monthly payment requirement (often "interest only"); however, the debtor may make a repayment of any amount so long as it is greater than the minimum payment (but less than the total outstanding). The full principal amount is due at the end of the draw period, either as a lump - sum balloon payment or according to a loan amortization schedule . </P>

Home equity line of credit what is it