Home Equity: The Revolving Line of Credit

Finance being discussed on a tabletThe finance world changes by the day, and it takes an effort to be at par with the developments. Have you heard of HELOC in Ogden? You can get this from institutions such as Wasatch Peaks Credit Union. If you are not familiar with it, read on to know more about this new baby in the industry.

A HELOC is a line of credit that works like a credit card, only that its collateral is your home equity. Thus, if you have built good home equity and are in need of cash, you may use HELOC to get money.

The good thing is that you can borrow as much as your limit allows you to, and will have to pay for the amount you borrowed with interest.

Are HELOCs different from home equity loans?

You get a lump sum amount of money at once when you apply for a home equity loan. Usually, the amount has a fixed interest rate, and you need to pay back the loan in monthly installments. This is not so with HELOCs.

The cash is not in a lump sum, and you access the money as you need it. Thus, HELOCs suit individuals who need long-term funding. HELOCs work with variable interest rates, and you will use the current rate when paying back the amount.

But how do HELOCs work?

A HELOC contains two periods; a draw period and a repayment period. The draw period is the one you can access the cash. At this time, you also pay monthly installments but just for the interest.

After the draw period is over, you go to the repayment period where you pay back the amount together with interest.


HELOCs are a great way to borrow cash for a long time. You not only borrow as much as you need, but also the interest rates are lower than those of credit cards.

If you are lucky enough, the interest may be tax deductible. If long-term borrowing is your thing and you need to pay less interest, a HELOC is all you need.