HELOC Beginners 101

Understanding home equity lines of credit can be complicated—but it shouldn’t be. In fact, there really should be a course called “HELOC Beginners 101.” One where homeowners learn what they need to know to gain control of their equity. And unlock their income’s full potential.

Now, most resources will tell you that a HELOC “is like a second mortgage.” That’s true … to a point. But it’s not the whole story. What most tutorials or explanations fail to mention is that home equity lines of credit can be written to take the place of your mortgage. That’s right. A HELOC can be take first-lien position.

But hang on, you say. I don’t understand. What’s the difference between a home equity loan (HEL) and a home equity line of credit? What am I getting into?

heloc beginners 101

Welcome to HELOC Beginners 101!

To get a firm grasp of your options, remember one thing: a home equity loan can only be issued for a percentage of the equity you already have in your home—but a HELOC can be issued for a percentage of your home’s entire value as a first-lien loan.

A Home Equity Loan Is…

  • Like a second mortgage.
  • You’ll usually get the full amount at once.
  • In addition, you’ll pay it back with fixed monthly payments at a fixed rate of interest.
  • The term is generally 10 to 15 years.


  • Like a credit card backed by your home’s value.
  • You get a max limit of 90-95% of your home’s appraised value.
  • The interest rate is variable and depends on many factors, but usually has limits in place to protect you from violent rate swings.
  • You can also draw as much as you need, whenever you want.
  • And, just like a HEL, you’ll pay it back.

However, there’s a better way to pay a home equity loan back. After the HELOC’s draw period, when the repayment period starts, you’ll have mandatory fixed payments. But before then? You can pay back as much of it as you like. That’s the method we advocate for here on this site. Using this method, you could end up paying off your mortgage using the HELOC—then paying down the HELOC balance—on your entire home value.

HELOC Beginners 101? Not for Long

You don’t have to stay in HELOC Beginners 101 for long. Once your HELOC is in place, you’ll quickly move up to Intermediate – then Advanced – then Expert.

With discipline and dedication, you could be debt-free using a HELOC.

Are you ready to control your equity? Simply click here to get started.