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.
- They give instant access to cash
- If you’re not carrying a balance, you don’t pay interest
- 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.
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