When you have equity in your home, it can serve as collateral for a home equity loan or home equity line of credit, commonly known as a “he-lock.” similar to a credit card, a “he-lock” can provide a revolving line of credit that can be tapped into as needed. It usually has an adjustable interest rate, so payments may increase or decrease as the rate adjusts.
Alternatively, if you need a one-time, lump-sum loan to pay for a major expense, such as your child’s education or a home improvement, a home equity loan can be helpful. Often called a second mortgage, a home equity loan has a fixed interest rate that is to be paid back in equal monthly payments during a specific period of time.
Because the details of “he-locks” and home equity loans differ with most banks, talk to a local mortgage specialist to fully understand your options before signing on the dotted line.