The financial acronym HELOC stands for Home Equity Line of Credit. The HELOC is a loan agreement over a certain term with the equity in a home placed as collateral.
For example, a Home Equity Lines of Credit or HELOC, unlike a regular Home Equity Loan, does not give the borrower a lump sum. Instead, the HELOC gives them a credit line which can be used much like a credit card. A draw period of between five and twenty five years is assigned, and withdrawals can be made during this period. The funds are repaid with interest and only the funds withdrawn are charged. The entire amount of the HELOC loan is due at the end of the draw period, either as a lump sum payment or according to a loan amortization schedule. The popularity of HELOC loans contributed considerably to the sub-prime mortgage crisis.