Understanding HELOC terminology: A simple guide for young adults

by Kamel LoveJoy, First Alliance Credit Union

Navigating the world of home loans and lines of credit can feel overwhelming, especially when you’re just starting out. That’s why understanding key terms related to Home Equity Lines of Credit (HELOC) is crucial. In this guide, we’ll break down these concepts into simple, easy-to-understand language. By the end, you’ll have the knowledge to make informed financial decision with confidence.

What is a HELOC?

A Home Equity Line of Credit (HELOC) is like a credit card but uses your home as collateral. It allows you to borrow money against the equity you’ve built in your home. Equity is the market value of your property minus what you owe on it. Unlike a fixed loan, a HELOC gives you flexibility by letting you borrow as needed within a set credit limit.

 

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