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Home Equity Line of Credit. you borrow against the cash in your home

Home Equity Line of Credit. Basically, you get a check book/debit card and whenever you use it, it borrows against the equity in your home.

Ex: Your home is worth $100,000, and it's paid for. You can apply for up to 80% of the value of the house ($80,000), but you don't have to take the money immediately. It's just there if you ever need it. And it doesn't cost you anything unless you have a balance.

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And it doesn't cost you anything unless you have a balance.

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This isn't universally true.

I've seen annual fees of around 25 dollars.

The others have explained things reasonably well, it's some of the cheapest revolving credit you can have.

When you set it up the lender will send out an appraiser to assess the value of your home and make sure title is clear. This will cost you probably in the neighborhood of $500-$1000. Typically you can finance up to 80% of the assessed value of your home, so subtract from that your mortgage balance plus any other encumbrances and that tells you how much you can expect from your HELOC.

You don't *have* to borrow from it, but if you decide to do so all you have to do is deposit a check in your bank account. Once you do, you'll start paying whatever the APR is on your HELOC, and that is typically pretty low, much lower than any other form of revolving credit.

If you can do it for any reasonable amount that is worth the upfront cost I highly advise going ahead.

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When you set it up the lender will send out an appraiser to assess the value of your home and make sure title is clear. This will cost you probably in the neighborhood of $500-$1000.

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I'm in the process of applying for a HELOC and I was told all fees are paid for by the bank I'm going through. Only cost for me is a $40 recording fee.