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The Curious Bag
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A home equity line of credit is one way to get money out of the equity you have established in your home. Terms for home equity lines of credit will vary from lender to lender, but some terms are common in the home equity loan industry.
Life of the Loan
Most home equity lines of credit are for a loan period of 10 to 20 years.
Variable Interest Rate
In most cases, a home equity line of credit will have an interest rate that is variable. Variable interest rates fluctuate. As rates change, your payment can increase or decrease.
High Balances
If you maintain a high balance on your home equity line of credit, most lenders will offer you a lower interest rate.
Minimum Payment
Home equity lines of credit give you the option of simply paying the minimum monthly payment, which is usually equal to the amount of interest that is due.
Automatic Payment
If you make your monthly home equity line of credit payment automatically through your checking account, many lenders will offer you a lower interest rate.
End of the Loan
When the loan comes to an end, you are required to pay the amount that is still owed. Whatever balance is still owed will require a balloon payment to avoid breaching the terms of the agreement.
Source:
What You Should Know About Home Equity Lines of Credit
Resource:
Board of Governors of the Federal Reserve System
Federal Trade Commission
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