- A home equity line of credit is a revolving loan secured by your home that allows you to make monthly payments on the balance and borrow more money as you pay down your balance.
- Closing your line of credit is usually as simple as writing a letter, signing a form provided by your lender or making the request online. It is usually necessary to pay off any balances you owe before the request will be honored.
- Though it may expire after a set number of years defined in your contract, your home equity line of credit will not close just because you paid it down to a zero balance.
- Some consumers are less likely to overspend when large amounts of credit like home equity lines are not available to them. In some cases, closing revolving lines of credit improves your credit score.
- Home equity lines typically offer lower rates than credit cards or unsecured credit lines, making them preferable for unexpected expenses. If you decide you wish to open another home equity line of credit in the future, you might be subject to fees or closing costs and you run the risk of your home losing value or your credit worthiness declining, which would make it difficult to obtain another line of credit.
- Many financial institutions charge early-termination fees if you close your home equity line of credit before a certain period of time. Consult the credit agreement from your loan paperwork or contact your financial institution before taking any steps to close your home equity line of credit.
