What is a HELOC?

HELOC (pronounced hee-lok) stands for Home Equity Line Of Credit and is a loan given to a mortgage holder based on the amount of equity you have in your home.  Equity is the appraised value of your home minus the amount of money you owe on the mortgage.  Although a HELOC is a loan, it is often treated as a credit line where you can have a card that you can use for purchases myuch like your other Visa or MasterCard credit cards.
A HELOC is a good thing to get when you have large expenses that you need to pay for your home (renovations, fixing the roof, etc.) or if you have a large family expense (college tuition, illness, or family emergency).  It is generally not a good idea to get a HELOC to pay for a car or buy things that will depreciate in value (big screen tv, etc.).  If your property value goes down (like many have) you can find yourself losing all the equity in your home and owing much more than your house is worth due to the mortgage amount plus the HELOC amount.

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