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Lets you tap home equity without disturbing the primary mortgage (nice if you've locked in a low rate).

Typically lower upfront expenses than home equity loans.

Lower interest rates than with credit cards.

Usually low or no closing expenses.

Interest charged only on the amount of money you use.

- Close X Icon Lenders may need minimum draws.

- Close X Icon Rate of interest can change up or downward.

- Close X Icon Lenders may charge a range of charges, including yearly fees, application costs, cancellation costs or early closure costs.

- Close X Icon Late or missed payments can harm your credit and put your home at danger.

Alternatives to a HELOC

A HELOC is not the right choice for every debtor. Depending on what you need the money for, among these alternative options may be a much better fit:

HELOC vs. home equity loan

While similar in some methods - they both permit property owners to borrow versus the equity in their homes - HELOCs and home equity loans have a few unique differences. A HELOC functions like a credit card with a revolving line of credit and normally has variable rates of interest. A home equity loan works more like a second mortgage, supplying funds in advance in a lump sum at a set rate of interest.

HELOC vs. cash-out refinance

A replaces your current home mortgage with a bigger mortgage. The difference in between the original mortgage and the new loan is paid out to you in a swelling amount. The main distinction in between a cash-out re-finance and a HELOC is that a cash-out re-finance requires you to replace your existing mortgage, while a HELOC leaves your existing mortgage undamaged