THE WORDS BEHIND THE NUMBERS
HELOC terms, in plain English.
A quick reference for reading a quote, comparing fees, and asking a more specific question.
Index
A published benchmark used in a variable-rate formula. Confirm its name, source, observation date, and reset schedule.
See it in context →Margin
The percentage points added to the index in the agreement’s formula. A 7% index plus a 1% margin produces 8%, before other terms.
See it in context →Introductory rate
A starting rate that applies for a limited time. Record its end date separately from the ongoing formula.
See it in context →Rate floor
A minimum rate specified by the agreement. Falling index values may not lower a rate already at its floor.
See it in context →Rate cap
A limit on how high the rate can go under the agreement. Read the maximum rate and any adjustment limits together.
See it in context →Draw period
The phase when borrowing from an open line is allowed under its terms. Payment and access requirements vary.
See it in context →Repayment period
The later phase when the outstanding balance must be repaid under the agreed schedule or other terms.
See it in context →Interest-only payment
A payment covering interest without reducing principal. A $50,000 balance remains $50,000 if no principal is paid.
See it in context →Fixed-rate conversion
A feature some HELOCs offer to move an eligible balance to fixed-rate repayment. The rest of the line may remain variable.
See it in context →Fee recapture
Repayment of previously waived costs when a stated contract condition occurs, such as closing within a specified period.
See it in context →Percentage point
The difference between two percentages: 8% to 9% is a 1-percentage-point increase. On $50,000, that adds about $41.67 monthly interest using rate ÷ 12.
See it in context →Available credit
The amount the lender currently permits you to draw, subject to terms. It differs from the outstanding balance on which interest is charged.
See it in context →Background: CFPB HELOC booklet · CFPB home equity plan disclosures. Calculations and scenarios on this page are original illustrations.