Tune in to this week’s podcast where I give Matt Robison a quick and dirty lesson on all things HELOC and explain why I just paid mine off.

Home Equity Lines of Credit (HELOC) are popular lending options for homeowners with a decent financial stake in their property. Earlier this year, it was estimated that 17% of Americans currently have a HELOC. And why not? With interest rates in the 2-3% range, a HELOC made a great option for getting cash to fund projects like home improvements. 

Did you spot the past tense? As federal interest rates rise, so do mortgage rates and, you guessed it, HELOC rates. The average HELOC rate for borrowers is currently 6.51%. 

It made sense for me to take a HELOC a few years ago to cover some education expenses and home improvement projects. Rather than pulling money from my portfolio, where it was making roughly 8% in interest (given historical context and what we know about the market), I borrowed against the equity in my home since I was only paying 2% interest. 

Now, however, the interest rate has risen to the point where it no longer makes financial sense for me to keep that balance outstanding. Will I close the line of credit? Absolutely not. Why? Because if the market takes a downturn and I want to buy-in while everything is essentially “on sale,” I can use the HELOC to get cash easily. It can also be used as an emergency fund, should that become necessary.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

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