Is a HELOC Still a Smart Move for Homeowners in 2025?

A Home Equity Line of Credit (HELOC) allows you to tap into your home equity, which is the difference between your home’s value and what you owe on your mortgage. Instead of a lump sum of money, you’ll receive a credit limit (typically 80% to 85% of your equity) that you can draw from as you want to.

This flexible financing option gives homeowners access to funds for big-ticket expenses without disturbing their existing low-interest mortgage. “Many homeowners have ultra low rates on their current mortgage and don't want to lose that rate with a refinance. A HELOC keeps the current mortgage and goes behind it in a second lien,” explains Jeremy Schachter, branch manager at Fairway Independent Mortgage Corporation in Phoenix.

Why More Homeowners Are Using HELOCs in 2025

According to the New York Federal Reserve Bank, consumer debt in the U.S. hit a new peak of $18.2 trillion during the first quarter of 2025. Mortgages made up the majority of this total, reaching $12.8 trillion. One noticeable trend was the increase in home equity line balances, which rose by $6 billion to hit $402 billion overall.

This growth isn’t surprising. Compared to credit cards or personal loans, HELOCs generally offer lower interest rates and higher borrowing limits. As financial pressure continues due to elevated living costs, many homeowners are using HELOCs as a practical way to access cash—though it's important to weigh whether it's the right choice for your specific situation.

How HELOCs Help Build Wealth in Orange County

Orange County homeowners are uniquely positioned to benefit from HELOCs due to rising home values. “Your home equity is one of the most, if not the most, valuable assets you own,” says Shelby Rothman, certified financial planner and founder at EnJoy Financial.

For instance, Rothman helped clients who wanted to build an Accessory Dwelling Unit (ADU) in their backyard. Instead of dipping into savings or taking out high-interest loans, they used a HELOC to fund the build. This not only added value to their property but also allowed them to complete the project using their own equity with a short, five-year payoff plan.

The Risks You Shouldn't Ignore

As valuable as HELOCs can be, they're not without risk. “Since the interest rate on a HELOC is usually variable, it could rise to a point where you aren’t able to pay off the loan,” Rothman warns. She stresses the importance of having a clear repayment strategy from the start.

Another concern is overuse. “Doing so can continually eat away at your home equity, especially if you’re unable to pay it off,” she adds. And because your home serves as collateral, failing to repay the loan could result in foreclosure.

Bottomline

Whether you're planning a renovation, looking to fund a smart investment, or need access to emergency cash, a HELOC can be a powerful financial tool when used wisely. For homeowners in Orange County, the opportunity to capitalize on increasing property values while maintaining low mortgage rates is especially compelling. If you're considering a move, a remodel, or simply want to explore how to leverage your home equity wisely, connect with me at Whitestone Real Estate. Let’s turn your property into your most powerful asset.

Reference: Baluch, A. (2025, May 21). HELOC Balances Have Risen 27%—So Why Do Financial Advisers Agree It’s Still the Best Option for Certain Homeowners?