A HELOC, otherwise known as a home equity line of credit, provides a homeowner with an open line of credit that can be used to borrow money whenever the need arises, up to the approved amount. HELOC's normally have a fixed term of ten years, however, the monthly payments are not set at a fixed payment amount. Rather, the payments are based solely on the amount of money that has been borrowed against the home equity line of credit, meaning that the monthly payment amount can fluctuate from month to month. The good news is that HELOC”s generally offer a fixed rate of interest, so the borrower does not have to worry about rate increases for a period of ten years. Like any type of financial product, HELOC's have advantages as well as disadvantages. Some of the advantages are as follows: • Offers a fixed rate. • Affords long-term savings while avoiding rate increases. • Offers a fixed term. Some of the disadvantages of a fixed rate home equity line of credit include: • High penalties are imposed for switching from a fixed rate to a variable rate HELOC. • If interest rates drop and stay dormant, you have lost out on a potential saving by having a fixed rate. While each financial institution is different, there are a few ways that money from a HELOC can be accessed. Some institutions will issue a book of checks that can be used to make purchases, and the amounts of these checks are simply paid out against the home equity line of credit. Other financial institutions will issue the borrower a debit card, which can then be used at automated teller machines as well as at point of sale terminals to pay for goods and services, as well as obtaining cash. Before deciding on a HELOC, make sure that this type of financial product will work for your particular situation.