A home equity line of credit, also known as a HELOC, is a line of credit secured by your home. Homeowners with a good amount of equity might use a HELOC to pay for home remodeling, put a down payment on a second home or investment property, or pay other large expenses when the interest rate on the HELOC is better than other forms of credit. A HELOC can also be used as an emergency fund since the available funds are not borrowed until needed, like a credit card. For this reason, A HELOC is a type of revolving credit, and is secondary to the primary mortgage.

An alternative to a HELOC is a cash-out refinance. The main difference from a HELOC is a refinanced home is placed in a new loan, with a new rate and terms. If the owner decides to take some equity as a part of the refinanced loan (cash-out), the entire cash-out amount is paid to the homeowner when the loan is funded.

Your Intercap loan officer can explain the differences in costs and benefits of these two options to tap into your home’s equity without selling your property.