A HELOC can be a smart way for some homeowners to fund home improvement projects or pay for emergency expenses. On the pro side, HELOCs offer:

- lower interest rates than most credit cards

- high limits

- low fees

- tax-deductible interest

But, there are some downsides to borrowing money with a HELOC. On the con side, HELOCs tend to have adjustable interest rates and no periodic interest rate caps. Some unfortunately homeowners have recently found that taking out a HELOC can make it difficult to refinance a first mortgage and that HELOC lenders have the right to cancel or lower their limits in a declining real estate market.

Want to discover more HELOC pros and cons? Read the complete list.

See Also: How a HELOC Works

Tags | Heloc, home equity loan