Our homes are our biggest asset, and in a cash crunch they could provide some much-needed relief.
A home equity line of credit, aka a HELOC, can put money in your pocket.
A variety of lenders issue home equity lines and each bank has different criteria, fees and payback options.
Here are some basic facts about these loans to help you decide if a HELOC is a good idea.
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Carlson says many people are using HELOCs to pay off high-interest credit card debt.
The rates on most equity lines are much lower than on most credit cards after introductory offers.
That means if you dont pay, your home is at risk of foreclosure.
If you dont pay your equity lender, they can absolutely come and take your house, she said.
Theres actually teeth to their bite, where with (debt collectors) theyre just annoying.
But just because you have been paying on a mortgage doesnt necessarily mean you have built equity.
Equity is the difference between what your home is worth and what you owe.
It builds over time as you pay down your mortgage.
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Is a HELOC a Good Idea?
Carlson has some advice for those wondering if a HELOC is a good idea.
Home equity lines of credit can be a very low cost borrowing alternative, if needed, Carlson says.
