What is a home equity line of credit (HELOC)?

A home equity line of credit (HELOC) is a loan offered by a lender that uses the borrower’s home equity as collateral. In Virginia, HELOCs are a type of loan secured by the equity in a borrower’s home. This type of loan allows borrowers to access the equity in their home as credit—similar to a credit card—and borrow money as needed and pay it back in installments or a lump sum. A HELOC can be used for a variety of different purposes, such as home renovations or other large expenses. Borrowers can typically access up to 85 percent of the equity in their home through a HELOC. This is known as the loan-to-value ratio (LTV). The lender will assess the value of the home and then set an LTV limit based on that assessment. When it comes to getting a HELOC in Virginia, it is important to shop around since lenders have different rates and terms. It is also important to make sure you understand the terms of the loan before signing any paperwork. Additionally, it is important to remember that a HELOC is a loan and not free money. Borrowers are required to make payments on a regular basis and failure to do so could lead to foreclosure.

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