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Home Equity Line Of Credit - HELOC You, HELOC You Not

Unlike the traditional home equity loan, a home equity line of credit is an open-starting, open-ended financial tool that is incredibly flexible. You can access your home equity any time you want, for any reason. Countrywide, home equity is making the grade. There are a hundred and one good reasons why you should take out a line of credit over a loan, and a hundred and one reasons why this line of financing will hurt you in the end.

The glories of a home equity line of credit

A home equity line of credit - or HELOC as it is commonly referred to in most mortgage circles - is the footloose cousin of home equity loans and a major benefit for your long-running financial demands:

when you apply for a home equity line of credit, you are applying for continued access to your home's accumulated equity - not a one shot deal like a home equity loan.
you are your lender agree upon a term of use, then a term of repayment. You can access that home equity line of credit at any time throughout the term of use up to an amount lower, equal to or greater than your actual home equity, depending upon yoru chosen lender and what you need from the HELOC altogether.
Repayment is similar to the traditional mortgages and loans you find everywhere else, with one critical exception - you do not have to begin repayment until the term of use is completed. If you take out a 5-year home equity line of credit with a 15-year repayment term, you can access that money in the first year and not have to worry about it until the five years are up.

Well, thats not entirely true - you always have to worry about home equity loan rates, and the dangerous increases you should expect.

The advantages of knowing where you are going

With a home equity loan you know exactly how much money you are getting and exactly how much you will repay - your monthly payments begin immediately at a home equity loan rate you actually know. But with a HELOC you never know how much you are going to need or when you are going to need it. When you access that money rates may have soared to prohibitively high levels without you knowing about it, and you'd be stuck with a debt you cannot afford. Our advice is to use the HELOC as a long running financial support, and to keep a wary eye on the sucker!