Using a HELOC for Real Estate Investing and Emergency Funds

Home equity line of credit (HELOC) is becoming popular for real estate investors who are reluctant to opt for cash-out refinancing if it means giving up a lower interest rate. This is because loans with interest rates lower than the historic rate of inflation are considered assets, as the lending institution effectively pays borrowers to borrow money. Many people currently have loans with interest rates between 3 and 4%. With a HELOC, individuals can access a line of credit secured by their property in addition to their primary mortgage, without incurring interest or payments unless the credit is used. The low cost of having a HELOC, typically around $100 administrative fee per year, makes it a valuable financial tool for opportunities in investing or as an emergency fund, as it acts as a substantial credit reserve without the obligation to pay interest until used.

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