Home Equity Lines of Credit (HELOC) as debt management tools

Home equity lines of credit (HELOCs) can serve as a lower-interest alternative to credit cards for managing major expenses or consolidating debt. While U.S. homeowners lost an average of approximately $8,500 in equity during 2025, the average accumulated home equity remained around $295,000, according to the Cotality Homeowner Equity Report for the fourth quarter of 2025.

Potential uses for home equity include funding education, home improvements, medical costs, business ventures, and real estate purchases. However, experts caution that using home equity to pay off student loans may result in the loss of federal forgiveness opportunities.

When considering a HELOC, borrowers should evaluate several key factors beyond the headline interest rate. These include the current home value and available equity, the specific benchmark the variable rate is tied to, the lender's margin, and any periodic or lifetime rate caps. Additionally, understanding interest-only minimum payments during the draw period is essential for assessing potential financial risk.