What Are the Disadvantages of a Home Equity Line of Credit?
Written by True Tamplin, BSc, CEPF®
Updated on August 17, 2021
If you cannot pay your outstanding balance, your home is liable to be seized and sold to pay back your creditors.
What Are the Disadvantages of a Home Equity Line of Credit FAQs
Line of Credit (LOC) Definition
What Is a Line of Credit and How Does it Work? Revolving vs Non-Revolving
Lines of credit will either remain open, or will close, once the loan has been repaid.
Revolving lines of credit are considered “revolving”because an individual’s credit is replenished when some or all of the outstanding debt has been paid off.
Non-revolving credit usually has a lower interest rate.
How does a Line of Credit Work? Secured vs Unsecured
Credit card loans are almost always unsecured, which causes creditors to take on more risk and is why credit card interest rates are generally higher and the borrowing limits are generally lower than secured loans.