Credit line or Mortgage?

Sifting through the usual bombardment of information this morning I came across this article and it really struck me that generally people do not know what they have gotten themselves into when they opt for a secured line using their home as collateral.

While the statistics in this article are quite high demonstrating the general lack of knowledge about the product, I believe the actual numbers are probably higher. Specifically, the number of people I speak to who say their home is free and clear and they do not have a mortgage, but then find out they have a credit line secured by the home is staggering.  I would say most if not all clients I have met in this situation were under the impression they did not have a mortgage.

The rest of the statistics they refer to I find clients are equally as misinformed in my opinion, with the numbers being close to 95{435763c83784f7362adf16aec6a4ffa3ed39c2c51e047e7cc3b29dbab8d1e357} or even 99{435763c83784f7362adf16aec6a4ffa3ed39c2c51e047e7cc3b29dbab8d1e357} of the people I talk to not knowing the answers to those questions.

While I do not think credit lines are a bad product, I do think there are very specific cases to use them and even more cases not to use them. With current rates the way they are often times you are paying far too much interest if you do have a credit line.

I strongly suggest that if someone is considering a credit line or HELOC that they do their homework, and specifically speak to someone who understands the different options available. As a mortgage broker we have access to information for most of the lenders out there and how they work, and access to some very interesting products. We can also guide our clients in a direction that might be more suitable for their own unique circumstances.

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