What is a Home Equity Line? What are the pros and cons of a Home Equity Line versus a cash out refinance? Some of the pros for doing an Equity Line would be if you only need the money for a short-term basis. In addition to that, it is very quick, and there is hardly any closing cost. In fact, there is sometimes NO closing cost.
On the other hand, some of the cons of getting a Home Equity Line are as follows. If you think you’re going to have this money outstanding for a long period of time, getting an Equity Line is typically tied to a variable interest rate. You never want to be in a situation where you have money that you’ve borrowed long term with a rate that can go up to an unknown figure because Equity Lines are tied to the prime rate, which is set by the Federal Reserve.
In addition to that, an Equity Line reports as a revolving trade line on your credit, the same way a credit card would report. So, if you were to end up using the entire line of credit and you are maxed out on the line, it would ultimately bring your credit score down.