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

A home equity line of credit (HELOC) is a type of loan offered in Washington that allows homeowners to borrow against the equity they’ve built up in their home. Equity is the difference between a home’s appraised value and the amount of money still owed on the mortgage. With a HELOC in Washington, the lender agrees to give the homeowner a certain amount of money for a specified period of time, usually between five and fifteen years. During this period, the homeowner can borrow against the line of credit as needed, up to the maximum amount that was set by the lender. The homeowner is only required to make payments on the amount of money they borrow, plus interest, during the loan period. The funds borrowed by the homeowner can be used for nearly any purpose, including home improvements, home repairs, college tuition, or other expenses. Additionally, the terms of HELOCs can be flexible, allowing homeowners to make payments that are more manageable for them. HELOCs can be a beneficial tool for homeowners looking to make improvements to their home or cover unexpected expenses. However, homeowners should be sure to understand the terms of their loan and only borrow what they can afford to pay back. Additionally, it is important to understand the risks associated with HELOCs, such as the potential to owe more than the value of the home if the real estate market shifts.

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

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