A home equity line of credit (HELOC) is a popular way to pay for home improvements, major repairs or other big expenses. More than 1 in 10 U.S. consumers plan to apply for a new home equity line of credit in the next year, according to the Q3 2022 TransUnion Consumer Pulse study, and an additional 5% plan to refinance an existing HELOC.
If you’ve built up value in your home, taking out a HELOC may be tempting. Like all forms of debt, it can be a useful tool, but should be managed carefully.
Here is an overview of what a HELOC is and how it can impact your credit:
What is a HELOC?
A HELOC is a financial product that essentially acts as an additional mortgage on your home. Your lender provides you with a revolving line of credit, somewhat similar to how a credit card works. But instead of an unsecured loan like a credit card, with a HELOC you use your home as collateral.
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