Home lines of credit, or HELOCs, are open, revolving loans that allow future progress in the approved credit limit. Like credit cards, they offer cash as necessary with flexible payment options during the drawdown period. The period of drawing a line of credit home equity is the amount of time the credit line is open to ten years in general, after which the balance must be paid.

Advances made during this period may have lot of small monthly payments in which only minimal amounts are paid toward the principle with the rest of the payment goes to interest accrued or interest payments may only be made. At the end of the drawdown period, many plans have balloon payments where monthly payments will be increased substantially to cover the remaining balance due or the entire balance may be due immediately. There are plans that provide reimbursement for Home Equity line of credit loan over a period of time after the draw period has ended.

Interest Home Equity Lines of credit is usually variable and linked to prime lending rate to which most major banks charge their customers credit largest and most worthy. These variable rates generally have a cap to limit the height of an interest rate can be charged and some have limits on how low interest rates can get. Variable rates are subject to quarterly adjustment though some plans offer a fixed interest rate. Interest paid on Home credit lines are paid only when funds are used and is usually tax deductible.

Like Home Equity Loans, Home Equity Lines of Credit have fees that may be required to underwrite the loan. Some plans provide for a time, up front fees while others have annual fees. Plans that offer low monthly payments during the draw period may require a balloon payment at the end of the loan period requiring the entire outstanding balance. Other charges may also apply such as appraisal fees, fees for credit checks and closing costs. The federal Truth in Lending Act protects the borrower by requiring the lender to inform the borrower of all costs and conditions on which the application is given.

California residence to take a Home Equity Line of Credit have the option whether to allow businesses outside of affiliation and access to their financial information. Thanks to the California Financial Information Privacy Act, the lender can not disclose financial information on homes in California with other companies if it is required to secure the loan. Any other use of this information is at the discretion of the borrower.