A couple outside looking at their new home

Home Financing Library

Home Equity Line of Credit (HELOC)

If you need to borrow money, home equity loans or lines may be one useful source of credit. Initially at least, they may provide you with cash at relatively low interest rates and they may provide you with certain tax advantages unavailable with other kinds of loans. (Check with your tax advisor for details.)

At the same time, home equity loans or lines of credit require you to use your home as collateral for the loan. If you sell your home, most plans require you to pay off your loan or credit line at that time. You may also want to explore home equity loans. Although these plans also place an additional mortgage on your home the money usually is loaned in a lump sum, rather than in a series of advances on an account. Also, home equity loans usually have fixed interest rates and fixed payment amounts.

You also may want to explore borrowing from credit lines that do not use your home as collateral. These are available with your credit cards or with unsecured credit lines that let you write checks as you need the money. In addition, you may want to ask about loans for specific items, such as cars or tuition.