Nonpayment of a mortgage loan will almost always end in foreclosure. Because mortgage loans are secured by the property they finance, lenders have the right to seize property as a result of a borrower’s failure to pay his mortgage payments. What some borrowers don’t realize is that defaulting on a home equity line of credit, or “HELOC,” can also end in foreclosure – even if the individual’s primary mortgage payments are current.

A HELOC Is a Second Mortgage

A HELOC’s limit is based upon the amount of equity an individual has in his home. If, for example, a borrower’s home were worth $150,000 and he owed $160,000 to his primary mortgage lender, he would not be eligible for a HELOC due to his lack of equity. If, instead, he only owed $100,000 on the loan, he’d have $50,000 worth of available equity with which to qualify for a HELOC.

See: The Dangers Of an Underwater Home Loan