What is HELOC an acronym for?

HELOC stands for Home Equity Line of Credit. This financial product allows homeowners to borrow against the equity they've built up in their property. Unlike a traditional mortgage, which provides a lump sum of money, a HELOC operates like a credit card, enabling borrowers to access funds as needed, up to a predetermined credit limit. This can be particularly useful for making home improvements, consolidating debt, or covering other expenses without the lengthy process of applying for a new loan.

The structure of a HELOC includes a draw period, where the borrower can access funds, usually followed by a repayment period. During the draw period, individuals may only be required to make interest payments, making it a flexible financial option. Understanding this term is crucial for those in real estate, as it impacts discussions about financing options available to buyers and homeowners.