 TITLE: Home Equity Loan vs. HELOC: What’s the Difference? CONTENT: What Is a Home Equity Line of Credit (HELOC)?\n---------------------------------------------\nA home equity line of credit gives you access to a pool of money—the credit line, or borrowing limit—that you can draw from as needed by writing checks or making charges or cash withdrawals with a dedicated card. You don't pay interest or have to make payments until you use your credit, and then, as with a credit card, you can make payments of any amount (as long as you meet a monthly minimum) to pay down the balance as quickly or as gradually as you are able. The longer you take to pay the balance, the more you'll pay in interest charges.\nUnlike a credit card account, which typically stays open as long as you continue using it and making required payments, a HELOC has a fixed lifespan that gets divided into two phases:\n*   **The draw period**: You can use the account to borrow and repay money freely. This period typically lasts 10 years, at which point the loan moves into the repayment period.\n*   **The repayment period**: You can no longer borrow against the credit line during this time, and must repay the outstanding balance. The repayment period typically lasts 20 years.\nThe lengths of your draw period and repayment period will be specified in the HELOC loan agreement.\nInterest rates on HELOCs are often variable, tied to published market rates and currently range from a low of 2.5% to as much as 21%. The rate you're offered will depend on your credit scores, income, and the lender's policies. END