Hey Friends, Today's blog post is gonna be controversial and I can't wait to read some of these comments. I know it but the point of this discussion is to open up a Home Equity Line Of credit today.

So first what is a HELOC again?

It is a home equity line of credit if you own your home and you have some equity in your home it's basically a line of credit. Tt's a checkbook access to the equity in your home.

Now I recommend everybody have one of these. I also recommend that you don't use it. Let's be really clear I'm not telling you to go open this account and then spend the money don't do that. I can't be any more clear about it but I can be very confident in saying that everyone should have a home equity line of credit and if you don't have one you should open it today and why am I so filled with conviction about this because I've learned many times over that during periods of dislocation like when you actually need access to that line of credit is when you won't get it you'll get rejected.

The time to get the line of credit is when you don't need it because that's when you'll be approved. so what am I talking about, well a home equity line of credit is a great way to save for a rainy day. Let's say that you lost your job god forbid I hope that never happens to anybody but if you did lose your job and you don't have enough savings and now you're gonna be a forced seller of your car or your house that's a really bad situation but if you take out a home line of credit like today while you're still gainfully employed and the banks will say yes to you then you have a little bit of cushion.

Again I wouldn't encourage you to spend unnecessarily or to just draw it down to fund your lifestyle but just having that little bit of cushion will bring you relief and get you through to the next day or maybe you have a problem with your rental like in my Alabama house Hurricane Nat in November came and destroyed the pier in the pier house and we're looking at about an $80,000 renovation.

I don't really have a choice I need to do that the people that are coming to my Alabama short-term rental are doing so to be on the water and over the pier you know walking down the pier to the pier house so I need that but that doesn't necessarily mean that I have $80,000 just sitting there waiting it for a rainy day like this so if I have a home equity line of credit and I must do the repair now I have the ability to do the repair.

Do it timely not lose an entire season of income but get the repair done draw down the line of credit take the income from the summer season the peak season and repay my line of credit. So that's sort of the point I highly encourage everybody to get a line of credit when you can. The time to get it is when you don't need it. I encourage you not to use it and the final thing I would say is there's really no reason not to the only reason not to is if you can't control your spending but I hope that you can and there's generally a maybe a hundred and fifty dollar annual maintenance fee most banks charge a maintenance like account opening fee. But there's no financing costs if you don't draw it down.

So let's say you go out and you get a hundred thousand dollar line of credit you pay a hundred or 150 dollar annual fee and it just stays open and you never draw it down that's a really nice peace of mind and if you do need it then you draw it down and then that's when the interest will start applying and then I would encourage you to pay it back as quickly as possible.

Another consideration is your credit score depending on where you are in the spectrum it may actually reduce your credit ability. Because you've now got this line of credit so you want to keep that in mind. The flipside is it could actually help your credit to showing that you're a responsible individual and having access to credit and not using it shows that you're mature and so I can't opine on what it's gonna do to your credit but I just want to point out that credit is important very important and this is technically getting more credit. So just recognize that but in the end it's just a great opportunity for you to have peace of mind have access to capital that's in your home, it's your equity and then I would encourage you not to draw it down unless you absolutely need to and then if you do need to then you have no choice.

So let me know do you have a line of credit if you do why if you don't why please go ahead and leave your comments below really appreciate that we all grow from one another so share with us.