Home equity borrowing mistakes made at the end of 2025 could come with high costs and risky consequences. Getty Images/iStockphoto

Home equity loans and home equity lines of credit (HELOCs) can be effective, useful and affordable borrowing tools in today's unique economic landscape. But they're not perfect and, like all other borrowing products, need to be approached strategically in order to secure value and minimize risk. That's especially true when considering that both products leverage your existing home equity as collateral. Failure to make repayments as agreed could easily result in foreclosure on the property in question.

At the same time, home equity loans and HELOCs represent two of the most affordable ways to borrow money right now, with interest rates under 8%

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