It’s not easy having a HELOC

Having a home equity line of credit (HELOC) is not an easy task. The problem with it is that you are forced to answer a couple of uncomfortable questions. Questions that may help you with your finances but are nevertheless, troublesome. One of the first things you are required to ask yourself is if you should keep the credit line, even though the rate has almost doubled in 21 months or refinance it.

The fact that credit lines are indexed to the prime rate meant that the good times couldn’t continue forever. Every time the Federal Reserve raises short-term rates, borrowers' minimum monthly payments go up. So now, the average rate on a credit line is higher than the average fixed-rate home equity loan. And if you go in for a 30-year, fixed-rate mortgage, you will find it even cheaper than the credit line.