A traditional Home Equity Line of Credit (HELOC) is a flexible, revolving line of credit that allows homeowners to borrow against the equity they’ve accumulated in their home. Unlike a conventional loan, where the borrower receives a lump-sum amount, a HELOC enables access to funds on an as-needed basis, functioning similarly to a credit card. Homeowners can draw from the line of credit during a set “draw period,” typically lasting 5 to 10 years, during which they can borrow, repay, and borrow again, up to the established credit limit. HELOCs often have variable interest rates, and borrowers are usually required to make interest-only payments during the draw period, giving them greater flexibility in managing their payments. Once the draw period concludes, the HELOC transitions into the repayment phase, during which the borrower must repay both principal and interest, typically over a 10 to 20-year period. HELOCs are often used for major financial needs like home improvements, debt consolidation, education expenses, or emergency funds. The ability to access funds as needed offers financial flexibility, but because the loan is secured by the home, failure to meet repayment obligations can lead to foreclosure. It’s important for homeowners to carefully consider their financial situation and borrowing needs before choosing a HELOC, as fluctuating interest rates can affect monthly payments over time.