What is a HELOC? 15 Must-Ask Questions for Homeowners Considering a Home Equity Line of Credit

If you're a homeowner looking to tap into your home's equity for things like renovations, debt consolidation, or even investments, you might have heard of something called a HELOC — a Home Equity Line of Credit.

As a realtor (not a lender), I’ve seen many of my clients benefit from using HELOCs wisely — and I’ve also seen some get caught off guard because they didn’t ask the right questions.

This blog is based on personal experience and professional insights, written in plain English, to help you feel more confident and informed when speaking with a lender.

What is a HELOC?

A HELOC is like a credit card that’s tied to your home’s equity. You’re approved for a certain amount, and you can borrow what you need, when you need it — usually over a 5-10 year period. During this time, you may only need to pay the interest. After that, you enter the repayment phase.

The 15 Must-Ask Questions About HELOCs

1. How much equity do I need to qualify?

Most lenders want you to have at least 15-20% equity in your home. Ask how they calculate it.

2. What’s the interest rate, is it fixed or variable and what is it tied to?

HELOCs typically have variable rates, so your payment can increase. It is important to also know what is the interest rate is tied to. Ask if there’s an option to lock in a fixed rate.

3. What’s the minimum credit score to qualify?

Lenders often look for scores of 680 or higher, but it varies.

4. How long is the draw period, and how does it work?

This is the time when you can borrow money. Know how long it lasts and what rules apply.

5. What happens during the repayment period?

Once the draw period ends, you must start repaying what you borrowed — usually over 10-20 years.

6. Are there any upfront or ongoing fees?

Application fees, appraisal fees, annual fees — some lenders waive them, others don’t.

7. What’s the borrowing limit — and how is it calculated?

It depends on your equity and credit. Ask for a clear explanation.

8. Can I make interest-only payments?

Many HELOCs allow interest-only payments during the draw period. Great for flexibility — but remember, you’ll still owe the balance.

9. Can the lender reduce or freeze my credit line?

Yes, especially if home values drop or your credit situation changes. Ask about their policies.

10. What happens if interest rates spike?

Make sure you understand your worst-case scenario and whether you can convert to a fixed rate and how the rate id calculated.

11. How does a HELOC affect my future refinancing or selling plans?

A HELOC is a lien against your home. It may affect your ability to refinance or sell until it's paid off. If you sell, this will get paid off along with your current mortgage.

12. Is there a prepayment penalty?

You might want to pay it off early — ask if there’s any cost to do that.

13. Can I convert the HELOC into a fixed-rate loan?

Some lenders let you do this for more stability. It’s worth asking.

14. What’s the approval process and how long does it take?

It typically takes 2–6 weeks. Ask what documents you’ll need up front.

15. What are some common mistakes or regrets homeowners have?

A good lender should be honest here. You’ll learn a lot by listening.

Bonus Question

What happens if I rent my home during the draw period?

Some lenders will close the draw period and move the HELOC to the repayment step and make it a fixed-rate loan.

Final Thoughts (from a Realtor’s Perspective)

A HELOC can be a smart way to unlock the power of your home’s value — but only if you go in with your eyes wide open. Use it as a tool, not a temptation.

If you ever want to know how much equity you have or need help finding a reputable lender, I’m happy to help.

About Me:

I’m Juan Rodriguez with Your Florida Home, a realtor based in Wesley Chapel, FL. While I’m not a lender, I’m passionate about helping homeowners make informed decisions that build long-term wealth.

Let’s connect: www.urflahome.com | Helping you build wealth through real estate

“Helping you build wealth through real estate.”