Some HELOC rates now start below 3%. Tempting, but is a home equity line of credit right for you?
duda • September 21, 2021
Marketwatch.com – September 8, 2021
This article outlines the benefits and risks of home equity lines of credit.
In the article, David Schneider states that “borrowers need to make sure they can afford higher payments when rates go up,” adding “Don’t be fooled by teaser rates,” which might be a low rate for the first six months, but then will likely rise.
He also notes, “now may be a good opportunity to obtain a HELOC — even if you don’t end up using it — because market dynamics are favorable,” adding “Compared with a year ago, home values have gone up, the unemployment rate has fallen, and interest rates remain low, while banks are more likely to lend than they were in spring 2020.”
The commentary concludes with Mr. Schneider saying, “Anyone taking out a home equity line should use it wisely,” and adding, “They’re a wonderful tool if used wisely; if not, they can dig somebody into a deeper hole.”
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