Key takeaways

HELOCs let you borrow only what you need, when you need it, and pay interest only on that amount, at a rate well below credit cards and personal loans.

The rate is variable, and your payment can almost double when the draw period ends and you start repaying principal.

Your home secures the credit line, so falling behind on payments puts you at risk of foreclosure. You may also pay fees a home equity loan doesn’t require, including annual, inactivity and cancellation charges.

A HELOC fits costs that arrive in stages, like a phased renovation or several years of tuition. If you know the exact amount you need today, a fixed-rate home equity loan is usually the better call.

A home equity line of credit , or HELOC, lets you borrow against your home equity much like a credit card: draw what you need, when you need it, and pay interest only on what you’ve used.…