Can I open a HELOC and not use it?
One of the main advantages of a home equity line of credit is that it is used on an “as needed” basis. So if you don’t need the money right now, you can just have it sitting in the account. It’s not going to be charging you interest, but it will be available for you in the time when you do need it.
When you do start using the account, at that point you’ll be responsible to pay the interest rate on the amount that you’re using.
This is different from a home equity loan where you’re taking out a lump sum and are required to make payments composed of principle and interest from that moment on.
Those who are thinking about borrowing a HELOC should consider what type or kind of equity line of credit they need to have. Here are the two most common types of lines of credit.
- Line of Credit Combined with a Mortgage
- A Stand-Alone Home Equity Line of Credit