In the current economy, many homeowners are worried about losing their jobs. Some experts suggest that taking out a home equity line of credit (HELOC) is a smart way to be prepared for a few months without any paychecks coming in.

BankingMyWay reports:

“One way is to get a home equity line of credit, or HELOC. It allows you to borrow against the equity in your home — the difference between the home’s value and what you owe on the mortgage.  Just remember, it’s essential to get the HELOC approved before you lose a job, as you probably won’t qualify afterward.

With a HELOC, you draw money only as you need it – and as much as you would with a credit card, but with a much lower interest rate. For most borrowers, interest paid on home equity loans is deductible on the federal income tax return.”

If you decide to take out a HELOC as safety net, keep in mine that you’ll be responsible for the balance even if the house goes into foreclosure. Unlike credit card debt, a HELOC is secured by your property. Don’t make the payments, and you may find yourself without a roof over your head.

See Also:

Is a HELOC Right for Me?

Negotiating HELOC Terms

Tags | Heloc, home equity line of credit, mortgage crisis, unemployment