Draw Periods - Because funds for a home equity line of credit are not received in a one-time payout, borrowers must obtain funds by withdrawing from an account, or line of credit. The mortgage lender approving the request will set up a revolving credit account, with the limit reflecting the borrower's approval amount. For a specified period of time, the borrower is able to withdraw from the account at their leisure. The payment due each month is based on the amount borrowed. Account limits are determined according to the borrower's equity, income, and credit. Repayment periods are flexible. On average, borrowers have 10 to 20 years to payoff the complete balance.

Low Settlement Cost - Even though homeowners have the option of refinancing their homes to tap into the equity, this approach entails closing costs and other fees. While a home equity line of credit is not fee-free, the fees are significantly less. The average cost for a home equity line of credit rarely goes beyond $1,000.

Fluctuating Interest Rates - The downside of a home equity line of credit is their adjustable rates. Rates can change suddenly, and immediately impact the borrower. Borrowers must recognize that adjustable rates on a HELOC are different from standard mortgage ARMs. The rates on standard adjustable mortgages have a fixed rate period, in which the rate will not change. Even though some HELOC offer initial fixed rates, the period seldom exceeds a few months.