The other day, someone reached out to me seeking advice on getting a Home Equity Line of Credit (HELOC) loan for one of their properties. They wanted to know if I had a “guy” who could assist them with it.

Since they were not a current client, I didn’t have their personal information. However, I provided them with a couple of alternatives to a HELOC that they might consider.

One alternative I mentioned was taking a loan out against their life insurance policy. If they have a cash value life insurance policy with significant cash value, designed for taking money out, it might be a great option for them.

Another option is a Securities-Backed Line of Credit (SBLOC). If they have a brokerage or investment account, they can take a loan using their securities as collateral. It works very similarly to a HELOC, but the key difference is that it uses securities to back the loan.

I’m not saying that a HELOC is bad or that these alternatives are necessarily better. What I always recommend is conducting a thorough analysis of your current financial situation. Understand what you have and what you don’t have. Consider the total cost of the loan, not just for today but in the long run. What are the expenses associated with each loan? What is the term of the loan? Is it a variable or fixed rate? Are there any situations where the institution can call the loan? What are the cons of each type of loan?

If you would like to have a free consultation to discuss your situation, click below to schedule a time.

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Jason Matthews

President/CEO Gibson Monroe Wealth Advisors & Matthews Financial & Insurance Solutions