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Summary
Home Equity Line of Credit (HELOC) is a revolving loan that is taken out against the equity you own in a property. Often HELOCs are used for investments to repair the existing property (depending on the location, there may be some government tax credits for this use), purchasing a car, financing a trip, etc. HELOCs work much in the same way as a credit card, but unlike a credit card this is a secured loan. Often lenders will even give borrowers charge cards they can use against the HELOC.

HELOCs can also give some tax benefits not available with other types of home loans.

House as Security
HELOCs will require property to be pledged as security for the loan(s). As you can imagine, this kind of debt is risky, if you default on a loan or even if you are late with your monthly payments it can have repercussions on the house.

In the event that you sell your home, the conditions of most loans will require you to pay off all debts on your credit line at that time. While home equity loans provide you with ready cash quite easily, be careful about borrowing too easily. A HELOC is still debt and will need to be paid back, as well as be charged interest.

Keys in Selecting a HELOC
Here are some key talking points to discuss with your potential home lender regarding a potential HELOC:

1) Understand the HELOC Margin. The margin is the amount that your lender can tack on to the prime interest rate, to determine the actual interest rate you'll pay after any introductory discounts expire. Get the lender to spell out exactly what the margin is on your particular HELOC.

2) Details on any Introductory Promotions. Many lenders have special promotions where there is guaranteed, lower interest rates for a specified period. Make sure you understand what happens to the HELOC once the introductory period is over.

3) Try to Negotiate your Appraisal. Rather than paying for a new appraisal, ask if you can use the same appraisal that was done when you first bought your home. Many lenders will normally not allow older appraisal data for a regular home loans, however, they often allow this when issuing a HELOC. Not having to issue a new appraisal can save you hundreds of dollars in closing fees.

4) Try to Waive Some or All Application Fees & Settlement Costs. With a HELOC, you can often get some concessions on application fees and settlement costs, more so than regular home loans. As with most lenders, you won't know what deals you can get until you try. Some lenders will waive several fees in order to keep your business.