We took out a huge HELOC when our kids entered college. We had paid the house off and intended it to be the source of their college money.
The advantage of a HELOC is that you don't have a monthly payment due every month. So, if times got tough and your limit was high, you could use the line of credit to write yourself a check to pay the interest. (Not a great scenario, but it would work in an emergency.
The other advantage of a HELOC is that you only pay interest on the amount that you are actually borrowing. Rather than taking out one big loan when DS entered, we wrote checks over the 7 years that the kids were in college.
We've never borrowed anywhere close to the limit of our HELOC. But, if we were to face a financial emergency, we have access to that full line of credit at an already established interest rate.
The advantage of a HELOC is that you don't have a monthly payment due every month. So, if times got tough and your limit was high, you could use the line of credit to write yourself a check to pay the interest. (Not a great scenario, but it would work in an emergency.
The other advantage of a HELOC is that you only pay interest on the amount that you are actually borrowing. Rather than taking out one big loan when DS entered, we wrote checks over the 7 years that the kids were in college.
We've never borrowed anywhere close to the limit of our HELOC. But, if we were to face a financial emergency, we have access to that full line of credit at an already established interest rate.
