We think that everyone who qualifies for a Home Equity Line of Credit (HELOC), should have one in place. Whether they should use it or not is another subject. You should have it for the following reasons:
You never know when you might need a significant amount of cash to fund something (i.e., a good investment, the down payment for another home so you don’t have to go contingent, medical bills, car repairs, etc.). Having a HELOC provides the following benefits:
- Qualify for a refinance. It is good to take care of it and have it in place when you do qualify.
- They only have a $35-$50 annual fee to keep them active, even if you don’t use them.
- It is one of the best financial “security blankets” available today.
- The interest rate is still very reasonable and you are only charged interest when you use it.
- It is a good alternative to a Reverse Mortgage, and can be refinanced and paid off with a Reverse Mortgage
- It is a great financial tool to invest funds for an opportunity that will yield more than the HELOC interest will cost you.
- Most HELOC’s don’t cost anything to start.
The key with having a HELOC is to exercise discipline, just like with credit cards. Credit cards are great if you use them to fund purchases and gain perks, like free airline tickets or cash rewards, but then pay off the card balances monthly to avoid the finance charges. With equity lines, you use the line when you have a pressing need or a great investment where you will benefit from the arbitrage (using their money to make more money). If managed with common sense, Home Equity Lines of Credit can be a very nice financial tool for the homeowner.
If you have questions or want to start a HELOC, contact us today: kthayer@rfmoc.com
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