Significance

• Many borrowers procure home equity lines of credit to allow the accursed interest to be written off as a tax deduction on their upcoming year's taxes.
  
  

Function

• A home equity line of credit, or open mortgage, is similar to a credit card in the fact that the balance can be charged up and paid down an unlimited number of times.
  
  

Types

• Most open mortgages are interest-only mortgages with variable interest rates that are tied to the prime rate. If a borrower wants to reduce the balance, he has to make additional principle payments on top of the interest-only payments.
  
  

Considerations

• Many borrowers purchase a home equity line of credit at the time of their first mortgage closing to save on closing costs and to have it available if needed later .
  
  

Benefits

• Not only is the interest on a home equity line of credit deductible, but an open home equity loan is an easy and fast way to access a borrower's home equity without having to purchase an expensive refinance on the residence.