How Does a HELOC Work?

How Does a HELOC Work?

Senior Loan Officer
Brian Decker
Published on January 12, 2023

How Does a HELOC Work?

Thinking of doing a home renovation or consolidating your mortgage? A home equity line of credit might be the best choice for you. Let's dive into what a HELOC is, how to effectively use a HELOC, and how to decide if it's the right choice for you.

What is a HELOC?

A HELOC, or a home equity line of credit is a way to borrow money using the line of credit secured by your home. This gives you a revolving line of credit for large expenses, or to consolidate large amounts of debt or other loans. Essentially, borrowing with a home equity line of credit is sourcing funds from the equity you have built up in your home.


A HELOC is a unique type of loan, as it does not involve one large payment of money. It offers access to a set amount of borrowable cash. You can borrow and repay up to a certain credit limit, similar to the way a credit card works.

Ways to use a HELOC

Since a HELOC is a line of credit using your home's equity, many people utilize a home equity line of credit to perform major renovations to increase the value of their home. However, you can use this line of credit to make large personal purchases as well. Another popular option is to refinance a different loan with the HELOC to secure a lower interest rate on a large chunk of debt. In addition, some borrowers use this loan to invest money and build upon their wealth. There are a plethora of options available when it comes to opting for a HELOC.

Fixed Rate Advances

Another option with home equity lines of credit is to take out a large amount of money with a fixed interest rate. For example, if you are doing a kitchen renovation and you know it will cost $10,000, you can take out two fixed-rate advances for $5,000 each in order to secure a low rate for the project's costs. Then, you can pay back the money over the repayment period with the secured rate. This is a great option if you have a set goal or project you want to accomplish with the HELOC.

Work with Modern Lending

If you are looking into HELOCs but don't know where to start, look no further than Modern Lending! We have a team of professionals loan officers who are all extremely knowledgeable in their field and can help you secure the best line of credit possible. Reach out to us today for more information on how to get started!

Senior Loan Officer
Brian Decker Senior Loan Officer
Click to Call or Text:

This entry has 0 replies

Comments are closed.

Get Your Mortgage Rate Quote!

Mortgage rates change every day, and your rate will vary based on your location, finances, and other factors. Get your FREE customized rate comparison below:

I Want My Mortgage Rate Quote!