What is a HELOC?

A HELOC, or Home Equity Line of Credit, is a financial product that allows homeowners to borrow against the equity they have built up in their property. This type of credit line offers flexibility to borrow funds as needed, up to a certain limit, which is determined based on the amount of equity the homeowner has in their home. The borrower can utilize this credit for various expenses, such as home improvements, debt consolidation, or other financial needs, making it a valuable financial tool for homeowners.

In contrast, the other options refer to different financial products or purposes. For instance, a loan for purchasing a car involves auto financing, which is specifically designed for vehicle purchases and does not involve home equity. A mortgage for investment properties focuses on financing for real estate that is used specifically for investment rather than owner-occupied properties. Financial aid for home renovations suggests assistance that is not necessarily linked to borrowing against home equity, and it may involve grants or subsidies rather than a credit line sourced from a home's equity.