Home equity
HELOC (Home Equity Line of Credit)
A revolving, variable-rate line of credit secured by your home's equity, with an interest-only draw period followed by a repayment period when the balance amortizes.
What does HELOC mean?
A HELOC works like a credit card backed by your house. During the draw period — often 10 years — you borrow, repay, and re-borrow up to your limit, usually paying interest only. Then the repayment period begins and the balance amortizes, which can raise the payment sharply. The rate is variable, tied to prime, so it moves with the market. Many Michigan owners use a HELOC precisely because it taps equity without disturbing a low first-mortgage rate. Credit unions like Lake Michigan Credit Union often post the sharpest HELOC terms in the state.
Common questions
How is a HELOC payment calculated?
During the interest-only draw period it's your balance times the monthly rate. In the repayment period the balance amortizes, which raises the payment sharply.
Is a HELOC rate fixed?
No — it's variable, tied to the prime rate, so the payment moves with the market. Some Michigan credit unions offer fixed-rate lock options on part of the balance.
HELOC or home equity loan?
A HELOC gives flexible, variable-rate access; a home equity loan gives a fixed lump sum. Both tap equity without disturbing a low first-mortgage rate.
Related terms