Lenders are seem to be putting HELOCs on the back burner as home prices continue to slide, but HELOCs are still great options for those looking to borrow. If you can qualify, here are five common benefits borrowers find in their HELOCs

Low Interest Rates Compared to Credit Cards and Personal Loans
Although HELOC rates are nothing outstanding in the mortgage arena, they are almost spectacular compared to credit cards and personal loans.  Consider it a reward for owning a home, but a HELOC can truly save you some cash if you have considerable debt on high interest rate accounts.  Just remember though that a HELOC is secured debt whereas credit cards are unsecured debt; so if you default on a HELOC, you do risk losing your home.

Higher Credit Limits
Most people do not have the luxury of having six-figure credit lines but with a HELOC you will enjoy a decent sized credit limit.  Granted you have the equity, HELOCs can easily be issued lines nearing $200,000.  Now, don’t go crazy just because you have that celebrity style credit line.  But, if you have medical bills or home improvements waiting, a HELOC can support you where most credit lines might not be able to.

Tax Deductions
While a HELOC resembles a credit card in the way it is issued and advertised, don’t forget that it is still a regular home loan with mortgage interest. Your individual tax benefits will be unique to your own situation, but mention it to your CPA when taxes are due and claim those deductions. Your deductions will be based on the amount of the HELOC and also how it was used. (i.e. purchase, home improvement, general cash out) Let’s see you try to claim some of that interest from your last credit card statement.

Low Fees
It is common for lenders to offer HELOCs with no application fees or appraisal costs - be sure to also shop around as lenders will offer HELOCs with varying options.  By taking out a HELOC, you can save yourself thousands in closing costs and fees by not having to refinance your entire loan. 

It’s There When You Need It
When you get a HELOC, you are issued a line of credit and can use this line however you please in the future.  So while you might have a $150,000 HELOC, you might have only initially borrowed $15,000; that means you have a remaining $135,000 at the tip of your fingers.  This could be great if you were thinking of making home improvements, but weren’t planning on doing so immediately.

So, if you are in the market and can take advantage of some of these key benefits - obtaining a HELOC may just be the right move for you. Read more about shopping for your HELOC.

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