A HELOC, or a Home Equity Line Of Credit, is an option that banks offer to homeowners. But who benefits more, you or them?

Keep in mind that there is a distinction between an Equity Loan and a Line of Credit, which is gained through the equity in your home. They are both the same form of loan, but the first one is more like a one-time request to either purchase something, such as a new roof, or to be used to consolidate high interest loans, like credit card debts and/or car loans. Another name for this type of loan is a second mortgage.

A Line of Credit borrowed against the equity of your home is different only in the way it is used. It is where the money you borrowed is placed into an account that can be borrowed from or withdrawn from without ever being charged any type of related charges.

It is very much like a credit card account, but at a much lower interest rate. The great part about this type of loan is that, like a credit card, you do not pay interest on the money if you are not currently using it. And you will also not pay any interest if you pay back the money before the end of the monthly cycle. This is where it becomes a great opportunity for accelerating a mortgage, for instance.

But I would recommend a person to not even bother with this type of loan is if they choose to get an Equity Loan for the purpose of finding relief from the high interest that have to pay on their credit card loans. If it is used simply for this reason, it could be only a road to more debt and a worse state of debt.

If someone gets to such a hurting position financially, before they look into getting an second mortgage to find relief, what makes them think they will not get into the same position, but this time without the equity in their home to fall back on. On this course, bankruptcy is the only road ahead.

Instead, a serious change of thinking is needed. The plan of attack should be to use an Equity Loan to free up some of your cash flow to use in paying down principle on your remaining loans, including your mortgage, to head down the road of being debt free. In this case, I would not only bother—I would find that it is not really a bother at all.

Do you want to learn the best way to escape paying interest? You can get my free ebook, How to Significantly Lower the Interest on All Your Loans, Including Your Mortgage, and That Without Refinancing.

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Alfred Spengly currently works with a company that has been registered with the better business bureau since 2006 with zero complaints. It is a company that strives for its customer's satisfaction, helping individuals and families manage their own money by providing the tools they need to establish their own financial security.

Personally, Alfred has worked in the financial field for almost 15 years.