A Home Equity Line of Credit (HELOC) is a type of revolving credit that allows homeowners to borrow against the equity in their home. It functions similarly to a credit card in that borrowers can access funds as needed, up to a predetermined credit limit, and only pay interest on the amount borrowed. The equity in the home serves as collateral for the loan. HELOCs typically have variable interest rates, meaning the rate can fluctuate over time based on market conditions. Borrowers can use the funds from a HELOC for various purposes, such as home improvements, debt consolidation, or unexpected expenses. As borrowers repay the principal, they can reuse the available credit during the draw period, which is usually around 5 to 10 years, followed by a repayment period where they can no longer access funds and must repay the outstanding balance, often over a 10 to 20-year period.