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What does HELOC stand for? 

What does HELOC mean? This page is about the various possible meanings of the acronym, abbreviation, shorthand or slang term: HELOC.

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HELOC

Home Equity Line Of Credit

Business » Real Estate -- and more...

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HELOC

Home Equity Lines Of Credit

Business » General Business

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What does HELOC mean?

HELOC
A home equity line of credit, or HELOC (/ˈhiːˌlɒk/ HEE-lok), is a revolving type of secured loan in which the lender agrees to lend a maximum amount within an agreed period (called a term), where the collateral is the borrower's property (akin to a second mortgage). Because a home often is a consumer's most valuable asset, many homeowners use their HELOC for major purchases or projects, such as home improvements, education, property investment or medical bills, and choose not to use them for day-to-day expenses.A reason for the popularity of HELOCs is their flexibility, both in terms of borrowing and repaying. Furthermore, their popularity may also stem from having a better image than a "second mortgage", a term which can more directly imply an undesirable level of debt. However, within the lending industry itself, HELOCs are categorized as a second mortgage. HELOCs are usually offered at attractive interest rates. This is because they are secured against a borrower’s home and thus seen as low-risk financial products. However, because the collateral of a HELOC is the home, failure to repay the loan or meet loan requirements may result in foreclosure. As a result, lenders generally require that the borrower maintain a certain level of equity in the home as a condition of providing a home equity line, usually a minimum of 15-20%.

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