What is a Home Equity Line of Credit?

But what about those homeowners that plan on staying put for a while, or who have just purchased their dream home with no intention of leaving?

The answer is simple. Put your home to work for you today with a home equity line of credit, or HELOC, as they are called in the mortgage industry.

Benefits of a Home Equity Line of Credit

Since home values have risen so dramatically, many home owners have twenty, thirty or even forty percent equity in their home, even if they only put down 5% a year or so ago. Unless they plan on selling today, that equity is doing nothing. It's kind of like putting all of your money into a checking account at zero percent interest or your child's college savings account is a hole in the backyard.

That's where a HELOC comes into play. Large purchases, such as automobiles, investment properties, and even college tuition can be paid for with a HELOC. And if you itemize your personal income taxes, the interest is usually tax deductible!

No Fee or Low Fee Home Equity Line of Credit

All right. You're interested, but you really could do without all of the fees associated with a new loan. Well you're in luck. Many times, a home equity line of credit carries few, if any, closing costs such as title insurance, settlement fees, attorney fees, etc. This makes the loan very appealing to cost-conscious borrowers hoping to gain a financial edge in life.

Additionally, many HELOC's have an interest-only feature for the first few years, making the payments less than a regular loan. This often makes out of reach items reachable, and is very appealing to people that know they are going to receive a bonus or pay increase in the future.

By recognizing the power of equity, you truly can call your home a "home, sweet home."