by Anthony B. Sanders
Anthony B. Sanders’ Blog
A home equity lines of credit (or HELOC) is a loan, using your home as collateral, that lets you borrow up to a certain amount, rather than a set dollar amount. A HELOC acts like a credit card: It has a credit limit, and you can borrow against it, pay all or part of the balance, and borrow again up to the credit limit. The interest rate varies with the prime rate.
But many HELOCs were interest-only for the first 10 years, but interest plus principal for the next 15-20 years kicking up the monthly payment due.
According to the Wall Street Journal,
“The bill is coming due for many homeowners on a type of loan that was widely popular in the run-up to the housing bust, causing a rise in delinquencies at banks.