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Yes, people seem to forget that HELOCs are usually callable too. If you have a $500k HELOC and have used $200k of it for something, the bank usually has the ri
by Asparagirl 5y ago
Yes, people seem to forget that HELOCs are usually callable too.
If you have a $500k HELOC and have used $200k of it for something, the bank usually has the right to force you to start making principal repayments (not just interest), to change the interest rate, and/or even in extreme circumstances to “call” the loan and ask you to repay everything ASAP. Read your fine print.
- gunfighthacksaw 5y agoThat said (and this goes counter to my previous comment) I think HELOCs are probably the safest credit source, purely because if the banks started calling them there would be an economic meltdown. Obviously if you’re going to overleverage yourself, a HELOC makes the most sense because of low rates, so I’d assume anyone who is overleveraged is doing it through a HELOC. However, if you can get a HELOC, you own property and are therefore much better off and less precarious than people who don’t. Ceteris paribus, I’d rather lose my shirt in a house I own rather than a rental.