Do you own a home? Did you know that owning a home gives you additional options when you’re in need of additional funds? Besides just racking up higher interest debt on a credit card? A home equity line of credit could make your life a little easier. A home equity line of credit, also known as a HELOC, is a line of credit secured by your home that gives you a revolving credit line to use for large expenses or to consolidate higher-interest rate debt from other loans. With a HELOC, you’re borrowing against the available equity in your home and your house is used as collateral for the line of credit.
Now that you know that you have options, check out four smart ways to use a home equity line of credit.
- Finance Large Purchases Do you have an expensive purchase and need to scramble some funds together? For example, how about a wedding, maybe your kids are going off to college this year, you’ve got a leaky roof, or you want to consolidate your debt into one easy to manage loan. If you’re in this boat, a HELOC could be the answer. This option makes financial sense for many people because HELOCs typically have a lower interest rate than most credit cards.
- Purchase Other Properties. You can also use a home equity line of credit as a resource for securing extra funds for a down payment for a second home. Dreaming about a lake house at Innsbrook, farm property, or maybe a vacation home in Branson? When you find a property that you believe is worth investing in, you may be searching for a quick source of cash. Opening a HELOC in advance will give you the flexibility that you need to seize the day. Turn your dreams into reality!
- Finance Home Improvements. It’s a smart idea to use your home equity to finance improvements on your home because many of these renovations will lead to an increase in home value. There is a significant opportunity for you to gain a valuable return on your investment through home renovations. Of course, these renovations are also a great way for you to enjoy your property down the road if you plan to stay in the same place for a while. Use a home equity line to add a room for a new child, renovate your kitchen, or add a new outdoor living space to enjoy the fall weather.
- Finance Long-Term Care. For many of us, a lot of our healthcare costs will come in the last few years of our lives. This can put us in a financially tight spot. A home equity line of credit is a great way to come up with funds quickly to pay for much-needed medical care, alleviating some of the stress of the costly medical bills and giving you some space to focus on healing.
When you get a HELOC, you’re not taking a lump sum of cash out of your home. You’re setting it up as a maximum drawable balance, and if you always left the balance at zero, your payment would be zero. This makes a HELOC a flexible tool to have cash available only when needed. When you do use it, you’ll start getting a monthly statement and the payment will be calculated on the outstanding balance.
A home equity line of credit is a great financial tool that can give you the flexibility that you’re looking for. So, whether you’re looking for quick access to funds because you want to consolidate your debt, for a down payment on your dream lake house, to pay for medical expenses, or to remodel your kitchen, just know that a home equity line of credit can help you achieve your goals.
Until next time,