Why Do People Use HELOCs (Home Equity Lines of Credit)?

Home equity lines of credit (HELOC) are the ultimate safety valve for homeowners. For less than $100 per year, you can treat your home equity like cash for times when you absolutely need it.

March 19, 2020 by Dan Green

As a homeowner, you get access to one of life’s most stable defenses against emergency, accident, and disaster — the home equity line of credit.

A home equity line of credit is a optional mortgage that lets homeowners spend home equity like cash – for any reason, at any time. Home equity line of credit is commonly abbreviated to HELOC (“HEE-lock”), and you can ask for one at the same time you apply for your loan.

In a lot of ways, HELOCs are like credit cards.

  1. They give instant access to cash
  2. If you’re not carrying a balance, you don’t pay interest
  3. Within your limit, you can spend as much as you want

Also like credit cards, HELOCs are an emergency cash source. Through a physical check book or lender-issued debit card, homeowners can use their HELOCs to pay for large doctor bills, unexpected home repairs, or anything else necessary.

They’re are typically no fees association with getting a line of credit, and annual fees rarely exceed $50. HELOCs are an inexpensive insurance policy for the hardships we don’t expect.

You might never use your HELOC, but it’s a comfort to know it’s there.

Are you a first time home buyer?

Let us know if you’ve done this before - whether you’re a seasoned pro or buying for the first time. We’ll share the perfect information with you as you need it.

More than 25,000 home buyers have customized their content

Sign up to customize yours

Already have an account? Log In