HELOCs ARE GREAT! Until They’re NOT… Using A Home Equity Line of Credit in 2021


HELOCs are great – until they’re not – and using a home equity line of credit in 2021 can be especially tricky given the recession and upcoming housing market crash (yes folks, I still think this is on the horizon for us).

In this episode, Matthew Pillmore, president of VIP Financial Education, discusses why he HATES home equity lines of credit and why he LOVES home equity lines of credit.

0:38 – What is a Home Equity Line of Credit? HELOC Explained! (Financial Literacy)

1:20 – Why I HATE Home Equity Lines of Credit Introduction
2:00 – Hate #1: HELOCs are attached to Prime.
2:26 – Hate #2: They are often frozen during downturns.
3:34 – Hate #3: Non-owner occupied difficulties (tough to get on an investment property).

4:32 – Why I LOVE Home Equity Lines of Credit Introduction
4:37 – Love #1: HELOCs are 100% Liquid – good as cash!
4:51 – Love #2: A HELOC is often eligible to use as a downpayment on a mortgage.
5:57 – Love #3: A HELOC can come with a relatively low interest rate.
6:15 – Love #4: HELOCs are relatively inexpensive when compared to other Debt Weapons, like a Home Equity Loan for example.
6:44 – Love #5: The potential tax benefits that come with a Home Equity Line of Credit.
6:50 – Love #6: High loan-to-value with a primary residence Home Equity Line of Credit.

7:11 – The best way to use HELOCs and other Debt Weapons… is like a perfect balance between “Rich Dad Poor Dad” Robert Kiyosaki and “Debt Is Stupid” Dave Ramsey.

HELOCs are one of the most versatile Debt Weapons out there and can be an excellent tool for speeding up your debt free journey, paying off your mortgage in a fraction of the time, and getting you into investment opportunities like buy and hold real estate. HELOCs can be a great way to build your cash flow! But… they also have some downsides…

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Robert Dunfee