When Not to Draw on Your Home Equity Line of Credit

When Not to Draw on Your Home Equity Line of Credit

For many years, we have written about appropriate and inappropriate reasons to have a home equity line of credit.   In particular, home equity lines of credit can be used to consolidate more expensive debt (credit card, education loans, etc.) and can be used by consumers to even out irregular cash flow.   We’ve even cited cases where the affluent can use home equity lines to their advantage.

Drawing on your home equity line jeopardizes your home if you cannot service the loan and repay the principal.   Therefore it is not without risk.

From the news this week, we have an example of a case where one really shouldn’t be drawing on their home equity line.   To be clear, nobody should be drawing on their home equity line in order to pay hush money to an adult film actress just before a Presidential Election to enable the Russians to complete their goal of electing a pawn as the U.S. President.   Michael Cohen has set a precedent that we do not recommend you follow.

Image: Celebsiren.com


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Featured - Home Equity Line Of Credit Rates 2018

Lender Rate (%) Monthly Payment Learn More
Third Federal Savings & Loan Assoc. of Cleveland 3.740% $231.27 Learn More
Flagstar Bank 5.490% $283.58 Learn More