This source of fast cash can either strengthen your finances or destroy them

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This source of fast cash can either strengthen your finances or destroy them


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If your emergency funds could use a boost, consider heading home.

A home equity line of credit — a loan that is secured by your abode — could act as an emergency source of cash in a pinch, as long as you use it responsibly.

“The one good thing about HELOCs is that the interest is at a better rate than what you’d get on personal loans and credit cards,” said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York.

Indeed, interest rates on HELOCs are currently in the range of 4.25 percent to 6 percent, according to Lending Tree. Meanwhile, average credit card interest rates are hovering around 17 percent and personal loans can carry rates exceeding 6 percent, according to Bankrate.com.

“It’s an attractive rate compared to other credit products, and it’s relatively easy to get if you have decent credit,” Boneparth said.

About a quarter of homeowners who’ve taken out a HELOC have opened the line to address emergency expenses, including car repairs and medical expenses, according to a survey from NerdWallet.

The personal finance site, in collaboration with Harris Poll, surveyed 2,043 adults online in March.

Approximately 1 in 8 borrowers took out a HELOC to protect themselves in the event of unemployment, NerdWallet found.

Here’s what you should know if you’re planning on tapping your home equity to bolster your reserves.



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