What Is a Home Equity Line of Credit HELOC?
Table of Content HELOC vs. cash-out refinance How Does Home Equity Line Of Credit (HELOC) Work? Home Equity Bankrate Flexible rates, low cost How Does a HELOC Work? When real estate values were surging in the 2000s, it was common for people to borrow from their home equity to invest or speculate in real estate investments. As long as real estate prices were rising quickly, people were able to make money. However, when real estate prices crashed, people became trapped, owning properties whereby some were valued at less than their outstanding mortgages and HELOC loans. Compared to credit cards, HELOCs are a cheaper source of debt by which consumers can fund their expenses. They tend to offer interest rates below 6%, while credit card rates are stubbornly high, ranging from 14% to 25%. Tax advantages – Interest on HELOC funds used to purchase, build or substantially renovate your home are tax deductible. If someone who has a HELOC decides to sell their home, they’ll probably be re