For this reason, HELOCs are often useful for expenditures that can be spread out over a period of years, like minor home renovations, college tuition payments, and helping out other family members who may temporarily be down on their luck.
During the draw period, you’ll need to make modest payments on your debt.
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The major issue with either type of equity loan is that your home serves as the loan collateral.
If you're unable to repay for any reason, your lender can take your house in foreclosure and sell the property to recover its investment.
Equity is an asset, so it’s a part of your total net worth.Although you're considered to own the property, you really only "own" ,000 worth of it.Your lender doesn’t own any portion of the property.However, these loans are complicated and can create problems for homeowners and heirs.
Home equity loans are tempting because you have access to a large pool of money—often at fairly low interest rates.
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