A Home Equity Line of Credit (HELOC) is a revolving line of credit where your home serves as the collateral.  Generally, banks will allow up to 75% of the home’s value minus what you currently own on your home as a credit limit.  Of course, the banks will also look at your debt-to-income ratio to determine whether or not you qualify for a loan of that amount.

Generally what happens is that you’ll be allowed to borrow up to the limit of your credit approval throughout the life of the loan.  Often times, however, banks will have a minimum amount that you can spend at any one time to prevent you from using it for everday expenses — most people reserve this line of credit for major expenses such as education and remodeling.

One thing to be aware of, however, is that the interest on HELOC loans are often variable rate instead of fixed-rate. You’ll want to make sure there is a cap on the amount of interest you pay over the course of the loan to prevent it from getting out of hand.