If you’ve ever wondered what a HELOC is or what you’re supposed to do with it, this article is for you. A HELOC, or Home Equity Line of Credit, leverages your home’s equity to give you more flexibility compared to other loans — you can borrow up to your maximum credit limit, when you need it, as you need it.
Here’s how you can use the cash from the equity in your home:
1. Create Your Dream Home
Unlock your dream home by renovating an old bathroom or kitchen, upgrading appliances or furniture, or overhauling your landscaping. Whether you like DIY or will rely on professionals, major projects like these are costly, and your HELOC can help you see it through start to finish. Improving your home can actually increase the equity, and some projects — like converting to energy-efficient appliances or drought-tolerant landscaping — can help save you money in the long run.
2. Debt Consolidation
If you’re trying to wipe out your debt, tapping into your home’s equity might be an option worth exploring. The interest rate on your HELOC may be lower than those of your other loans. If so, you can use your HELOC to simplify your payments and reduce interest costs.
3. Unplanned Expenses
Enjoy peace of mind when you have readily available funds for emergencies. Whether you have a roof leak or termites, you’re prepared to handle payments at a moment’s notice.
4. Medical Expenses
Medical expenses can be overwhelming, especially for surgeries and long-term illnesses. Even with insurance, you might need assistance covering your deductible. Your HELOC can help.
5. Long-term Care
If you have a spouse or relative needing long-term care, the flexibility to draw only what you need is well-suited to pay for these costs since you don’t know how long you will need the funds.
6. College Education
Headed back to school, or sending your children (or grandchildren) off? Borrow from yourself to pay tuition and fees.
7. Down Payment on a Second Home
If you plan to purchase a new home but need the proceeds from the sale of your current home to make a down payment, then a HELOC may be a good alternative.
8. Life Goals
Funding your dream vacation or dream wedding with your HELOC isn’t ideal because your home is your collateral. But the flexibility of your HELOC can be a valuable tool in planning these events, allowing you to quickly pull funds to confirm vendors or snag plane tickets.
Already have a HELOC or interested in opening one? We’re here to help.