Your home is a source of pride and achievement. Did you know that your home can also be an affordable source of income? As your home appreciates and you make your monthly mortgage payments, you build what is called equity. You can access this capital at attractive interest rates by using a Home Equity Line of Credit (HELOC).
There are a number of advantages to securing a home equity line of credit if you need access to cash for a project or other purpose. First, a home equity line of credit can be tax deductible. In addition, HELOCs are very flexible, you only access the money you need with checks or cards offered by your credit union. That flexibility extends to use. Below are some of the most popular uses for your HELOC.
o Education – College tuition can be very expensive and unfortunately there are not enough scholarships available to fund the educational expenses of all students who go to school. Most parents don’t have deep enough pockets to pay the bill, and many loans can be expensive or have unattractive features. A home equity line of credit offers an attractive option for financing your child’s education. Access money when you need it and pay tuition bills without stress or worry.
o Renovation or remodeling projects – Your home is probably your biggest investment. Add personal or more comfortable touches with remodeling or renovation projects. Many projects, such as kitchen and bathroom remodel jobs, can add value to the price of your home. Maximize your investment and take advantage of a tax exemption to get started.
o Travel – Traveling on a budget can be fun, but there are times when you want to go first class. The ride of a lifetime awaits you with a home equity line of credit. Join your family for a reunion in Ireland or celebrate your fifth or fiftieth wedding anniversary with an African safari.
o Buy a car: Buy the car of your dreams, finally, with a home equity line of credit. There’s no need to worry about haggling with the dealer or forgoing discounts or rebates, you have cash on hand and a great interest rate.
o Consolidate bills: The average American has about $ 7,000.00 in credit card debt. With typical interest rates and minimum payments, it could take more than twenty years to reduce the balance to zero. Your high-interest credit card bills are a thing of the past when you pay them off with a home equity line of credit. Again, the interest may be tax deductible. Before considering this option, make sure you are ready to change your spending habits; otherwise, it will be worse than when it started; And this time you won’t have your home equity as a safety net.
Home equity lines of credit help you do more of the things that matter to you. They can be a wise financial decision, as they typically offer lower interest rates than other types of loans. It’s important to proceed with caution when deciding on a home equity line of credit, as the loan is secured by your home. If you cannot pay, the lender is entitled to sixteen of your property to cure the default. Some states allow foreclosure without the permission of a judge. You could lose your home in as little as 37 days. Know the laws in your state, and before you sign on the dotted line, make sure you understand your responsibilities and obligations as a borrower, as well as the lender’s default and borrowing resources.