Yes, it is possible to lose your home with a HELOC if you default on payments. In fact, if you have a late default, your home could be foreclosed on. This is because the lender may require you to foreclose on your home as a way to recoup their losses. If this happens, it’s important to note that the primary loan lender will be the first in line to be paid out of the proceeds from selling your house. Your HELOC or the lender of your home equity loan will come in second. To avoid this situation, it’s important to make sure you are able to make timely payments on your HELOC before deciding to take one out. Here are some tips to help you manage your HELOC payments:
Create a budget and stick to it. Consider using a budgeting app or spreadsheet to track your expenses and income.
Don’t borrow more than you need. It’s tempting to take out the full amount of your HELOC, but only take out what you really need and can afford to pay back.
Make payments on time. Late payments can lead to fees and ultimately foreclosure. Set up automatic payments or a reminder system to ensure you don’t miss a payment.
Consider a fixed-rate option. If you’re concerned about interest rates rising and the potential for higher payments, a fixed-rate option may be a better choice for you.
By following these tips and being responsible with your HELOC, you can avoid the risk of foreclosure on your home.
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