Home Equity Line of Credit
A home equity line of credit gives you the right to draw on funds, up to a preset personal credit limit. You can draw on your credit line until you reach your limit at which point you cannot draw any more funds until you either pay off some of the balance or apply to increase your credit line. These advances may be made in whole or in part and interest accrues on only the amount that has been advanced. This type of mortgage is generally in a subordinate lien position to a first mortgage and often allows for an interest only repayment for a set period of time.
PRO: Flexability and Security. You are able to draw and repay on the loan as often as you like and it is a cash reserve that can be used for any purpose.
CON: The rate is adjustable so your payment can vary.