Home Equity Lines of Credit work very similarly to credit cards. You have a maximum credit limit and you can use any amount of the credit line up to that maximum limit. You only pay on what you borrow so if you have a equity line with a 20k limit and you only use 1k of the equity line you only have to make minimal payments on the 1k that has been used. If you have no balance on the equity line there is no payment to make.

Home equity lines of credit are used often for debt consolidation. Paying off high rate credit cards and consolidating them into one low monthly payment helps with monthly cash flow. Usually the rate on the home equity line of credit is lower than credit card rates also.

A Home Equity Line Of Credit is often treated just like a credit card on your credit report. If you "max out" this revolving line your credit scores may drop depending upon your overall credit profile.

A Home Equity Line of Credit is typically an adjustable rate product. Additionally, the index used for most HELOCs is the prime rate. Because the prime rate has seen numerous increases in the last half of 2005 and in early 2006, HELOCs seem to be losing much of their popularity.