Home Equity Lines Of Credit

During the past few years, millions of Americans fell in love with home equity lines of credit. These "helocs" are easy and inexpensive to obtain and they carried very low interest rates - until recently.

But what was a bargain two years ago can be a burden today. Consider: The monthly interest payment on a loan of, say, $50,000, has more than doubled in two years, to more than $333.

Helocs are credits that can be drawn from and typically act as interest-only loans with terms of five to 25 years after which the principal must be repaid. Interest is tied to the prime, the rate banks charge their best customers, which has soared since June 2004, to 8.25 percent from just 4 percent.

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