If your home has equity, then you have a terrific way to finance any number of needs.
When it comes to paying for college educations, home renovations, or many other needs, many homeowners rely on a home equity line of credit (HELOC). Overall, it’s a flexible and convenient way to borrow up to a predefined limit.
“We always compare how HELOCs work to credit cards,” offers Joe Perveiler, PNC Bank’s Head of Home lending Product. “They are incredibly valuable to homeowners to help build wealth and manage their financial lives. However, just like a credit card, it’s important that anyone using a HELOC should safeguard access to their account information.”
At the same time, Perveiler points out a key distinction from credit cards. “With credit cards, you don’t accrue interest if you pay off your balance every month. With a HELOC, interest begins to accrue immediately upon borrowing.”
Why is safeguarding your HELOC so important?
Because fraudsters are getting bolder. And, given the amount of money involved, a HELOC could prove a particularly attractive target.
According to the Federal Reserve, owner’s equity in household real estate has grown to almost $11 trillion, with the average homeowner having $199,000 in equity available to tap for lending.[1]
This means a HELOC is a convenient way to access your home’s equity and put it to use. At the same time, HELOCs have also become a highly visible target for fraudsters. Just the same as your mortgage, your personal information and property information, such as name and address, can be found in public records. In the wrong hands, that and other information can reveal how vulnerable your account might be. This underscores the need to be aware of how your information can be accessed for potential fraud.
None of this is intended to cause alarm. Rather, just the same as any financial product, a measure of prudence is a good idea. As Perveiler points out, “Common sense is your best defense.”
So, What Steps Should I Take?
When it comes to protecting your HELOC, caution is the rule of the day. Upon approval, homeowners are typically issued a set of checks to draw upon their account (With the exception of Texas, where checks are only furnished at the homeowners’ request). Those checks should be guarded with the same care as personal checks.
As Perveiler points out, “You wouldn’t leave your personal checks lying around, right? Well, the same should be true of your HELOC checks. Exercise the normal precautions you would to avoid check fraud.”
Some lenders, PNC Bank among them, offer the option of a card that’s tied to the borrower’s HELOC. In the case of PNC, a VISA Choice Access Card makes tapping into your equity as easy as using a credit card.* However, it is important to use the same precautions against fraud and unauthorized use as you would your credit card.
What are other safeguards you can take? All these precautions are easy to do and will provide you with security and peace of mind:
- Regularly monitor your accounts. Like almost all lenders, PNC offers digital tools such as online or mobile banking to manage money and to keep tabs on the balance and status of all account activity. Frequent reviews of account information are an effective way to catch unauthorized transactions.
- Keep all personal and financial information secure and private. That means shredding documents with pertinent information before discarding. Keeping all important documents – checks included – under lock and key. What’s more, for digital tools, use strong, unique passwords and change those passwords on a frequent basis. Finally, when able, create multi-factor identification for your digital accounts.
- Verify account contact information. Does the lender know how to best reach you in the event of a question or a suspicious transaction? Make certain your lender has the most current contact information for reaching you.
- Be secure online. That means only using secure and trusted networks for your online banking. Also, a VPN (Virtual Private Network) adds an additional layer of security, especially if you’re away from home.
- Double-check any correspondence. Scammers can be highly sophisticated. Both text and email phishing scams can look almost identical to emails from people and companies you know and trust. Be especially wary of any message that asks for your personal information or directs you to a website to provide that same information. When in doubt, contact your lender at a phone number listed on their website—not the number provided in a suspicious message.
- Be careful sharing personal and account information. Whether you’re responding to an email, phone, or text, never disclose personal information or credentials to anyone unless you are absolutely sure you know the person with whom you’re communicating.
- Finally, when in doubt, call. Regardless of how trivial you think your suspicion might be, the best policy is to contact your lender in the event of suspicious activity. It’s always better to be proactive and prevent fraud than to have to recover from it.
Two examples that should get your immediate response? 1) If you receive a new account opening letter when you didn’t open an account. Or 2) receiving a one-time passcode if you didn’t ask for it.
A Great Financial Tool. Yet Handle With Care
A HELOC can provide a homeowner with a wide array of benefits, from financial flexibility to making life goals a reality. Yet, as Perveiler concludes, “a HELOC is like any other financial product and it’s important to use it correctly to make sure it doesn’t fall into the wrong hands.”
The property securing the CHELOC must be located in a state where PNC offers home equity products. PNC does not offer the CHELOC product in Alaska, Hawaii, Louisiana, Mississippi, Nevada and South Dakota.
