HELOC rates have risen over the past month but remain near their lowest levels in about three years.
With many households feeling financially strained, more homeowners are weighing whether a HELOC could help them cover major expenses.
Linda Bell with Bankrate said people often "use it to renovate my home or maybe pay off high interest debt or pay for my child's college education. Those are some of the things people are using HELOCs for."
The average HELOC rate is currently 7.6 percent.
"When you think of that 7% rate, you have to kind of compare that with credit cards where you're spending about 20% on average, or if you wanted to take out a personal loan about 13%. So they're more affordable than that. But they're certainly not cheap either," said Bell.
One advantage of a HELOC is that homeowners can keep their existing mortgage rate.
But borrowers typically need at least 15 to 20 percent equity in their home to qualify.
Lenders also often require stronger credit scores and higher income levels, which can make approval difficult for people who are selfemployed, retired or have poor credit.
Another key consideration is risk.
"Another thing to think about is that your home is on the line. Meaning if you can't pay it back for any reason, you could potentially lose your home. So it's important to think about the pros as well as the cons before diving in," said Bell.
HELOCs function as a revolving line of credit, making them useful for ongoing projects where borrowers want flexibility to draw only what they need. But they come with origination, annual and withdrawal fees, as well as closing costs. Most also have variable interest rates.
"So if it moves higher, you have to make sure your budget can handle that," the expert said. They added that "if you think you could potentially lose your job. If you think your finances really can handle any kind of uncertainty, it's best to avoid it," she added.
Experts say for some homeowners, a HELOC can still be a strong option.
Another alternative is a home equity loan, which provides a lump sum with a fixed interest rate and set monthly payments.
Experts say that may be a better fit for people who need cash for a onetime expense.