I used to work for a financial agency that specialized in providing a home equity line of credit (also known as a HELOC) for those that felt that they needed them. When I was working for this company, probably the single most common reason that I would hear people give for getting one of these was so that they could consolidate their debts and help to pay off overdue Christmas loans or bills. Unfortunately, what many people may not have realized is that doing this can be a fairly risky proposition.
Just because using a HELOC is a popular choice to pay for Christmas or credit-card bills doesn't mean that it is a good one, and there is a reason for that. Basically what you are doing is in effect putting your home on the line for collateral on one loan only to repay smaller loans or bills. This may not seem like a problem (due to the fact that so many people do it), but frankly it is never a good idea to take one loan out to pay for another. When you are going to be dealing with another loan, you don't want to have to deal with something that can be as variable or unstable as the vast majority of HELOC's can be.
If you really are determined to use a home equity line of credit to pay for your Christmas bills or credit card bills, then there are a few things that you should keep in mind prior to signing anything.
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