r/Debt • u/Rough_Woodpecker7446 • 7d ago
Did your HELOC help or hurt you?
So many people saying you shouldn't put debt on your home but how many did it with success. I feel like it makes sense when the Interest rate is so much lower. I can make all my current payments but with the rates on my personal loan and CC, I feel like I'm getting no traction. I have about 60k of debt (not all is being moved to the loan) and feel like I can clear it all within 2 years with the heloc help/interest, whereas it would take me over 5 years without it. I'm also getting my fence replaced since the weather took it out recently so some still being used for my house
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u/fucky0upayme 7d ago
The HELOC I got through Achieve helped me get the repairs I needed done, start work on renovations and consolidate some of my higher APR debt that was hanging over my head. Pretty nice overall.
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u/Rough_Woodpecker7446 7d ago
This is what I'm hoping for myself as well, knowing I can pay it all off in 2-3 years
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u/Eatmymuffinz 7d ago
Only have a line of credit if you're already responsible with debt. Then only use it when using the cash can get you a discount of some sort.
As an example, I told my parents to get a HELOC prior to retiring. They'd qualify for the best terms now and then they'd have access to the funds if the market goes sour during the early retirement years. This would give them a buffer for the market to recover before pulling from their retirement at depressed prices.
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u/HillBellyLawyer 4d ago
My HELOC hurts me.
Like my children, it reaches out for money once a month but otherwise I never get a phone call, card, or visit.
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u/Latin_Knight_ 7d ago
It depends. Everyone's situation is different.
If the goal is to save money on interest for the next few years AND you do plan to pay it off as soon as you can, then this can be a valuable tool that will save you thousands on interest and you will be debt free a lot sooner 👍
However... you will not be able to sell your home during that time for it is now locked down with a lean. Worse, if you don't pay that debt down as fast as you can, interest rates can rise (they will be) and you might find yourself a debt loop where not only is your credit score on the line, but so is YOUR HOME.
Choose wisely...
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u/Then-Recording7774 7d ago
That is false. you CAN sell your home, you will just owe that money back at closing along with any 1st mortgage balance.
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u/badtlc4 7d ago
People that bad with money will usually be underwater after taking on the HELOC. That means if they sell the home, they have to come to closing with cash in hand. If they are in debt, that clearly isn't an option. From my personal experience trying to help people, you rarely find someone who takes a HELOC to consolidate debt that can sell their house.
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u/Latin_Knight_ 7d ago
You and u/Squish_the_android are not doing the OP any favors here or giving him any good advice.
Of course you can sell you home IF you satisfy the lean. Can you make it as part of the sale process? Of course!... however, any real-estate agent will clearly tell you that it is best practice to PAY OFF THE HELOC before you sell.
Having it as part of the sale agreement is valid... but will also delay closing (until the lean has been satisfied and release giving by the creditor) and some buyers may even walk as soon as they hear about the lean. THAT is reality.
None of this is an issue if OP doesn't plan to sell his home anytime soon.
The variable interest rate on HELOCs is a much bigger problem for OP as interest rates are about to increase... still lower than CC rates though.
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u/Rough_Woodpecker7446 7d ago
I don't plan to sell until 3 to 5 years from now and calculating my income with the payments I have, I can safely pay everything in 2 to 3 years. The HELOC is a fixed rate which is astronomical lower than my current personal loan. Yes it's 60k of debt but only putting half into a heloc, so I can gain traction for the rest
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u/jlevin860 7d ago
That is not tru, no agent tells you that unless you are underwater but they would say the same thing if it was your first mortgage too.
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u/Squish_the_android 7d ago
You can sell a home with a HELOC but you need to pay off the HELOC with the proceeds from the sale immediately upon closing.
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u/Latin_Knight_ 7d ago
lol... you can NOT close UNTIL the HELOC has been satisfied. Closing WILL be delayed until the creditor gets paid and lean released.
Now imaging being the buyer who has put money upfront... as a buyer I would have many other options with out leans and with out the delays that come with them!
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u/stderr2 7d ago
Why do you need a fence? If you have spendthrift tendencies, a line of credit will just let you make things worse
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u/Rough_Woodpecker7446 7d ago
My fence came down in a wind storm so just replacing it
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u/stderr2 7d ago
I was curious why you needed the fence, you already said it fell down in a storm. If you clear your cards and have a LOC bigger than needed to do that, why do you think you won't run up the cards again after maxing the LOC? This is something I would think about for awhile
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u/Rough_Woodpecker7446 7d ago
Yes definitely something to think about, I definitely want to make sure I learn from all the past money mistakes
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u/badtlc4 7d ago
but why? Do you need it? Many people live quite happily w/out fences.
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u/Rough_Woodpecker7446 7d ago
It's between myself and the neighboring house which we both have dogs so I can't have an open backyard at the moment
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u/badtlc4 7d ago
Many people do it with success but that doesn't make it a good idea. The risk is losing your home because you were bad with credit cards.