Home Equity Loan or HELOC?

[Anonymous]

Worried about RIFs and thinking of my potential sources of cash. I am late 50s and know my job prospects if I should lose my job aren't great. I have some savings but not enough. I do have lots of equity in my home.

While I still have a job, considering applying for either an equity loan or heloc. Is one a better option than the other?

[Anonymous]

HELOC will fluctuate. That could be a good thing or bad thing depending on the direction rates go after you secure yours.

[Anonymous]

Get a HELOC. A HELOC gives you access to a certain line of credit that you can pull from (more like a credit card with a max). You have access to a pot funds if you need it, but you only spend what you need when you need it and are only paying interest on the smaller amount that you need in a pinch. You’re likely to be more judicious/careful in your withdrawals and only take what you need. The equity loan disburses a loan all at once (more like a mortgage) and you have a pot of cash in your checking account but you’re paying interest on all of it all at once even if you don’t need to spend it right then and there. The HELOC may have a higher variable interest rate, but the loan balance should be smaller for longer. After you land a new job, if your HeLOC interest rate is too high, you can always take out a fixed equity loan to replace the HELOC and lock in a lower interest rate.

[Anonymous]

HELOC since you don’t know if you are going to need the money.

[Anonymous]

HELOC and smart to do it before you are laid off. It’s a fairly common strategy. There is a carrying fee each year to keep it open though.

[Anonymous]

Anonymous wrote:HELOC and smart to do it before you are laid off. It’s a fairly common strategy. There is a carrying fee each year to keep it open though.

I closed mine years ago but I never had to pay maintenance fees. Something new?

[Anonymous]

Np. Can HELOCs be a good financial strategy to pay off your mortgage faster? Or only good to have as emergency fund? Seeing different opinions on this.

[Anonymous]

We opened one recently - the carrying fees are nominal ($99/year) but closing was expensive due to MoCo taxes.

[Anonymous]

Anonymous wrote:Np. Can HELOCs be a good financial strategy to pay off your mortgage faster? Or only good to have as emergency fund? Seeing different opinions on this.

What? How would taking out more money against your house help you pay off your mortgage faster?