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Accurate as of June 30, 2024

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What Is a Home Equity Line of Credit (HELOC)?

Home equity represents the portion of your home that you truly own – it's the value of your home minus the outstanding mortgage balance. A HELOC allows you to borrow against this value.

Home equity lines of credit can be accessed through a cash-out refinance and used to build wealth by investing in other properties or ventures, consolidating debt, or lowering overall interest.

How Does a HELOC Work?


Home Equity LoansHome equity loans allow you to borrow against your home's equity with a fixed interest rate, making it ideal for specific projects or expenses.
HELOC LoansHome equity lines of credit provide a revolving line of credit based on your home's equity, giving you flexibility to access funds as needed.
Investment OpportunitiesSome homeowners use their home equity for home improvement loans or to invest in other properties or ventures, potentially increasing overall wealth.
Debt ConsolidationConsolidating high-interest debt into a home equity loan can lower your overall interest costs and simplify your finances.

HELOC vs. Home Equity Loan

The main difference between a home equity loan vs HELOC is how the money is repayed:

  • HELOC (Home Equity Line of Credit) – A revolving credit you can borrow against as needed; variable interest rate; flexible borrowing.
  • Home Equity Loan – A lump sum amount that you borrow all at once and repay over a fixed term; fixed interest rate; set repayment schedule.

How to Find the Best HELOC Loan

Taking time to compare home equity line of credit lenders can help you get a better idea of average interest rates and good loan terms to help you find the best HELOC loan available.

Before you apply for a HELOC loan, you’ll want to determine if a 15 or 30-year home equity loan is better for you. A 30-year home equity loan offers lower monthly payments but higher total interest, while a 15-year home equity loan has higher monthly payments but saves on interest over time.

Tips for Long-Term Home Loan Success

With on-time payments, mortgages and home loans help build equity, provide potential tax benefits, offer stable housing costs, and grow wealth. Follow these tips to help you stay on track:

  • Budget Wisely – Create a budget that includes your mortgage payment, property taxes, insurance, and maintenance costs, and stick to it.
  • Build Equity with HELOCs – As you pay off your mortgage, you'll build home equity lines of credit (HELOCs) that can be used for all kinds of expenses, like home improvements, education, and debt consolidation.
  • Review Your Mortgage Periodically – Keep an eye on interest rates and the market. Refinancing your mortgage when rates are favorable can lead to significant savings.
  • Plan for Emergencies – Establish an emergency fund to cover unexpected expenses, ensuring you can continue making mortgage payments even during challenging times.

Additional Resources

Compare our best HELOC lenders and find the best HELOC loan for your specific needs, whether it's for home improvement loans, renovations, investments in new properties, or you simply need extra cash.

» HELOC Resources – Shop Around or Learn More

Explore our best HELOC lender reviews before you apply for home equity loans.

» Company Comparisons – Refinance + Home Loans

Check out our best mortgage lenders 2024 to lock-in better rates on an existing mortgage or secure more affordable payments.

» Our Selections – Best HELOC Lenders 2024

Our analysts searched for the things you want to know, such as where to find the best home equity line of credit, and their findings make up our list of the best online home equity loans. Check out the ‘How We Rank’ section at the top of this page to learn more about the findmortgages.com ranking process and methodologies, as well as how we share information about our best online mortgage lenders with you.

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Frequently Asked Questions (FAQ)

A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home’s equity, allowing you to borrow up to a certain limit as needed, followed by a repayment period.
Yes, you can use a HELOC for home improvement loans, which provide funds for renovations, repairs, or upgrades to your home. This can potentially increase your home's value and your overall wealth.
A reverse mortgage is a home equity loan available to homeowners aged 62 or older, allowing them to convert part of their home equity into cash. The loan is repaid when the homeowner sells the house, moves out, or passes away.
Refinancing allows you to replace your existing mortgage with one that may have better terms, such as a lower interest rate or shorter loan term. It can help reduce monthly payments and save on interest. Leveraging home equity offers opportunities to access funds for various purposes, including home improvements, debt consolidation, or investments.
HELOC stands for Home Equity Line of Credit, a flexible loan option that uses the equity in your home as collateral to provide a revolving line of credit for various expenses.
Many homeowners use home equity loans to finance home renovations, making it a popular option for those looking to increase the value of their property. Simply apply for HELOC loans that work for you, and use the funds to complete your home renovation projects.
Obtaining a home equity loan can be straightforward if you meet the necessary requirements, such as having a reliable credit score, sufficient home equity, and stable income – though this depends on individual financial circumstances and the lender's criteria. Many lenders offer a HELOC online application process, making it easier to apply and get approved online.