Sometimes things can happen that put you behind on a few payments. Then it can all snowball quickly. What do you do when your mortgage is behind? Some homeowners opt to apply for a home equity line of credit or equity loan.

Sourced from: plungedindebt.com

A HELOC, otherwise known as a home equity line of credit, isn’t the same as a home equity loan. In a HELOC, homeowners set up the accounts after building up equity in their home.

The products are similar to a line of credit account where the consumer has access to capital with a defined value. The borrower has flexible access to the funds and can choose down on the value up to the credit limit. The lenders don’t control what the money is used for or how often the consumer accesses their money during the draw period.  Here is more on the pros and cons of a HELOC.

What is more important are the requirements for a HELOC.  In this article by Justin Weinger from Plunged in Debt, he does a good job simplifying the requirements for a HELOC and provides a good example of a typical line of credit situation.

Whether you use a HELOC for a rainy day fund or to invest in your home, you should consider opening this type of account.