Obviously, paying for purchases with cash is always best. However, if you just can't scrape up enough money for the holiday season, you might certainly consider using home equity. All loans considered, a HELOC is your cheapest source of money, especially given current mortgage rates. Also, interest paid on home-equity debt is normally tax-deductible, making the effective interest rate even lower. The overall cost of a heloc is going to be less than most credit cards you have access to.

You need to be disciplined, however. There is one very real danger of using home equity loans for purchases. Keep in mind that credit cards are unsecured, while a heloc or home equity loan is secured. Your home is the collateral. It is vital that you plan ahead, and know for certain that this type of loan is best for you. You must be certain that you can make the monthly payments in addition to your normal mortgage payments. Defaulting could definitely mean foreclosure on your home. Don't make this the most expensive holiday season ever by losing your home because of a defaulted home equity loan. If you do not feel that you will have the ability to make the payments, on time, each month, we recommend that you consider other funding sources. Some of these sources include credit cards and even friends and family, Spend wisely and enjoy the holiday season!