Glossary

The first-lien HELOC terms worth knowing before you compare loans.

Plain English first. The actual loan agreement still controls the legal meaning of your specific product.

Available credit

The unused borrowing capacity currently available under a revolving line, subject to the credit limit and loan terms.

A way of describing the balance level across days. In daily-interest structures, lower daily balances can reduce interest accrual.

The process of paying a loan balance down over a scheduled period through principal and interest payments.

Money coming into and leaving the household. Positive cash flow means income exceeds spending over the measured period.

A mortgage with a fixed original loan amount and scheduled repayment structure rather than a reusable revolving line.

The maximum line amount currently allowed under a HELOC agreement.

Interest calculated from the outstanding balance for each day, commonly used in HELOC structures.

The portion of the HELOC term during which new advances may be permitted, subject to available credit and the agreement.

The highest-priority mortgage lien against the property.

A revolving home equity line that sits in first lien position and can serve as the primary home loan.

Another way of describing a first-lien HELOC.

The minimum interest rate allowed under a variable-rate loan agreement.

Home equity line of credit—a revolving loan secured by residential real estate.

A market benchmark used as the changing base for some variable interest rates.

A contractual maximum that limits how high a variable rate can rise over the life of the loan.

The loan amount divided by the property value, expressed as a percentage.

A lender- or program-specific percentage added to an index to determine a variable note rate.

A cash-flow approach that directs income or transaction-account funds against the HELOC balance while they are not being spent.

A revolving credit arrangement that can generally be borrowed, repaid, and borrowed again within the applicable terms and limit.

Assets or liquidity available beyond the immediate transaction, often required by underwriting and useful for financial resilience.

Secured Overnight Financing Rate, a benchmark based on U.S. Treasury repurchase transactions. Some HELOC programs use SOFR-based indexes.

An interest rate that can change over time according to the index, margin, and adjustment rules in the agreement.