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When you take out a HELOC, you’re taking out a revolving line of credit based on the equity you have in your home. Homeowners typically take HELOCs out to cover hefty expenses like home remodels and repairs, medical costs and unexpected expenditures. HELOCs are different from other types of loans in that a borrower can selectively decide when and how much of the money they take out, as HELOCs operate on an as-needed basis and borrowers can withdraw funds incrementally or all at once. During typically the first 10 years of a HELOC, known as the draw period, the borrower is only required to make interest payments, but once the draw period ends, the repayment period begins and not only can the borrower no longer withdraw money, they’re responsible for repaying the principal and interest. 

When you take out a HELOC, you’re taking out a revolving line of credit based on the equity you have in your home. Homeowners typically take HELOCs out to cover hefty expenses like home remodels and repairs, medical costs and unexpected expenditures. HELOCs are different from other types of loans in that a borrower can selectively decide when and how much of the money they take out, as HELOCs operate on an as-needed basis and borrowers can withdraw funds incrementally or all at once. During typically the first 10 years of a HELOC, known as the draw period, the borrower is only required to make interest payments, but once the draw period ends, the repayment period begins and not only can the borrower no longer withdraw money, they’re responsible for repaying the principal and interest. 

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