During hurricane season there are many ways to prepare, and applying for a HELOC is one of them. But is a home equity line of credit right for you? A HELOC will allow you to access money from the equity in your home whenever you need it and for any reason. Interest rates for a HELOC are typically lower than with a home loan, personal loan, or credit cards. And a home equity line of credit can be opened for peace of mind yet never borrowed from, but there are some downsides.
- Because the rates are variable, they’ll fluctuate based on the economy.
- To qualify for a HELOC a homeowner will need to have good credit, a healthy debt-to-income ratio, and 15-20% of equity in their home.
- Those who do qualify may borrow more than they can afford which can lead to large payments when it’s time to repay the loan.
- If a homeowner gets behind on their payments, they risk losing their home to foreclosure.
- There are closing costs and fees with a home equity line of credit.
When used properly a HELOC it can be a beneficial financial tool. If you’re considering applying for one, make sure to do so before an emergency not after because your property will be used as collateral and you may not get approved if your home sustained damage in a storm.