Loans and mortgages – Buy your home with a HELOC

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You can use a home equity line of credit (HELOC) to actually buy a home. A HELOC is an adjustable-rate loan that works as a credit line rather than a mortgage. Usually, you get a HELOC with the equity you build up on a home. Now you can make a down payment on your home and use a HELOC to pay for the rest.

The interest rates for HELOCs are around 4 percent, which can save you a lot of money in interest charges. Since the rate is variable, it can go up or down. But it’s still better than the traditional 30-year fixed-rate mortgage with rates closer to 6, 7, or 8 percent. With a HELOC you can borrow extra cash without having to take out another loan, and all the interest you pay is tax deductible.

HELOCs usually have much shorter terms than traditional loans. Rather than being stretched out over 30 years, a HELOC will have a term of 10 or 20 years. You may want to consider a HELOC if you plan to pay off your home in a short time.

If you like having stable monthly payments, though, you should try something different. The rates for HELOCs change with the market, so the payments will, too.



All the best,



Timben