People use the equity in their homes for many different reasons. Home equity is often used to pay off other debt, fund home renovations and upgrade projects as well as help purchase other necessities. It’s important to know these few facts when obtaining a Home Equity Line of Credit or HELOC to ensure that this is something you can manage.
- HELOCs do not have fixed rates. This means your monthly payments can fluctuate. The interest rate is determined by the prime rate plus the percentage rate that the bank has set. Let’s say the interest rate at the bank is prime + 1.5%. If the prime rate is 2%, then take 2% and add 1.5%. This gives you a total interest rate of 3.5%.
- You might be paying way more than expected if the interest