A HELOC is a type of revolving credit that allows homeowners to borrow against the equity in their homes. It works like a credit card, where you have a credit limit based on the equity in your home, and you can borrow as needed.

While a home equity loan provides a lump sum upfront, a HELOC allows borrowers to draw funds as needed, up to a predetermined credit limit. HELOCs often have variable interest rates, whereas home equity loans may have fixed rates.

HELOC funds can be used for various purposes, including home improvements, debt consolidation, education expenses, or any other significant expenses.

HELOCs typically have variable interest rates that are tied to a benchmark rate, such as the prime rate. The interest rate can fluctuate over time however some fixed rate options may be available.

The draw period is the initial period, often 5 to 10 years, during which you can access funds from the HELOC. During this time, you can borrow and repay as needed. After the draw period, you enter the repayment period.

During the draw period, you're usually only required to make interest payments. Once the draw period ends, you enter the repayment period, during which you repay both principal and interest.

Yes, there are no prepayment penalties for paying off a HELOC early. You have the flexibility to pay down the balance whenever you want, which can save on interest costs.

While some lenders may offer HELOCs on investment properties, eligibility and terms may differ compared to primary residences.