Are there times when a HELOC shouldn be used?
HELOCs should not be used for day-to-day expenses (such as groceries) except in case of true emergency. Always remember you are borrowing against the equity in your home. If payment are ever in default, your home could end up in foreclosure. Instead, HELOCs should be reserved for big-ticket items (such as home improvements or college expenses). Some major purchases (e.g. cars or boats) can be financed with loans secured by the asset itself and often at very attractive rates. Explore these other options before using a home equity line of credit. Also, many boats qualify as second homes meaning the interest paid on a boat loan can be deductible without tying up your home equity.
