Home Equity Loans Can Sink Your Retirement

Some call it a ticking time bomb, while others call it nothing more than a potential problem.  

But whatever it is, pre-retirees and retirees who have a balance on their home equity line of credit, or HELOC, will need to plan for the day when that debt reaches its 10-year anniversary. That’s the day when instead of paying interest only on their HELOC they will have to pay both principal and interest, and pay it back—in most cases—as if it’s a 20-year mortgage, and at a higher interest rate.  

And if pre-retirees and retirees are unprepared for the added expense to their budget, things could get ugly, and fast.