The interest you save could offset the costs of establishing and maintaining the line. Moreover, some lenders waive some or all of the closing costs. Before entering into a plan, consider how you will pay back the money you borrow. Other plans may allow payment of interest alone during the life of the plan, which means that you pay nothing toward the principal. Regardless of the minimum required payment, you may choose to pay more, and many lenders offer a choice of payment options.
Many consumers choose to pay down the principal regularly as they do with other loans.
For example, if you use your line to buy a boat, you may want to pay it off as you would a typical boat loan. If you are unable to make the balloon payment, you could lose your home. If your plan has a variable interest rate, your monthly payments may change. Similarly, if you are making payments that cover interest plus some portion of the principal, your monthly payments may increase, unless your agreement calls for keeping payments the same throughout the plan period. If you sell your home, you will probably be required to pay off your home equity line in full immediately.