Tapping into your home’s equity is a way to get quick access to cash and knock some big items off your to-do list. With a Home Equity Line of Credit (HELOC) your credit limit will be based on your current home valuation, and it offers the flexibility of accessing the money when you need it. A big benefit of a HELOC - You only pay interest on what you actually use.
Here are some common reasons to take out a HELOC:
1. Home improvements
Home improvement is one of the main reasons homeowners take out a HELOC. Making improvements to your home not only makes it more comfortable and aesthetically pleasing, certain upgrades can have a significant impact on your home’s overall value.
According to research, the top two areas of a home to upgrade are kitchens and bathrooms. Done right, they add the most resale value.
2. Consolidate debt
Some homeowners use HELOCs to consolidate credit card debt since it typically offers a lower interest rate. If you’re considering paying off your credit card debt with a HELOC, it is best to have a long-term plan in place to ensure you can pay off the loan.
3. Emergency expenses
It’s always a good idea to have an emergency fund, and your home’s equity can help. Large medical bills, loss of a job, or any other unexpected, costly life event can be a good reason to utilize equity.
Using the equity in your home can be a smart way to pay for college. A HELOC may offer a lower interest rate than other loan options.
While some vacations can be covered within a family’s normal budget, many popular destinations can cost thousands of dollars. Using a HELOC can help finance your vacation plans without the worry of using a credit card or putting a strain on your normal budget.
Every time you pay down your mortgage loan or do something to increase the value of your home, you build equity. Equity is a major benefit to owning a home and a key piece of a homeowner’s financial security. These are just five ways you can utilize your equity, but truly the possibilities are endless.
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