Outside the Box: This is what borrowers really think about home equity lines of credit

“Trust, but verify,” isn’t just wise political advice, made famous by President Ronald Reagan. It’s also useful when evaluating financial news.

Recently, I have read with interest a spate of stories about home equity lines of credit (HELOCs). These financial products are essentially a second mortgage in which you can convert the market value of your home into cash. Financial periodicals are both heralding these instruments for giving consumers flexibility and decrying them because they may add risk to the financial system.

To verify whether consumers are more interested in HELOCs, I checked with several of my firm’s loan consultants who work in branches across the country.

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