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Many homeowners are using their home’s equity to secure a home equity line of credit. A HELOC is typically a second mortgage with interest only payments and low rates compared to credit cards or unsecured debts. Don’t miss out on these top 10 uses for HELOCs.
1. A HELOC can help you consolidate your debt
A HELOC can help you consolidate your debt by allowing you to use the equity in your home to pay off other debts. This can be a good option if you have a lot of equity in your home and you’re struggling to make payments on multiple debts each month. Since HELOC payments are interest only, they are typically much lower than other consumer debts.
Top 5 Debts to consolidate include:
- Credit card debt
- Student loan debt
- Personal loan debt
- Medical debt
- Business debt
It can also be a good option to get a lower interest rate than high-rate credit cards or unsecured loans. According to Forbes.com, the average credit card interest rate is 18%. Consolidating to a low rate mortgage may save you thousands in interest.
2. A HELOC can provide you with emergency funds
A HELOC can give you the financial flexibility to cover unexpected expenses when they arise. If a water heater needs replaced, or a vehicle breaks downs, the costs of repairs can be quite high. This type of loan can be a real lifesaver in times of need, providing you with the funds you need to keep your head above water.
3. A HELOC can help you finance home improvements
If you’re planning to make some home improvements and don’t have the cash on hand to pay for them, a HELOC can be a good option. With a HELOC, you can borrow against the equity in your home and use the money to fund your home improvement project.
Home improvements add value to your real estate which may help pay for itself when you sell your property. Just be sure to keep your borrowing within your budget and pay off your HELOC as soon as possible to avoid accruing interest charges.
Money Saving Home Improvement Ideas with a HELOC
- Add energy-efficient windows and doors
- Install solar panels or a solar water heater
- Install a rainwater harvesting system
- Upgrade your insulation
- Add double- or triple-glazed windows
- Add energy-efficient appliances
- Install a green roof
- Add a wood-burning stove or fireplace
- Install a ground-source heat pump
- Make your home airtight
4. A HELOC can help you pay for college tuition
A HELOC can also be used to pay for college tuition. This can be a good option if you do not want to take out a student loan, or if you want to avoid accruing interest on a student loan. However, you should be aware that if you default on a HELOC, your home could be foreclosed on.
5. A HELOC can help cover large medical expenses
In the event of large medical expenses, a HELOC may be a life saver. Using the equity from you home may be the solution to cover the large costs of surgery or medical expenses.
For some, plastic surgery to improve yourself may be something you have a always dreamed about. With access to a HELOC you may be able to able to make it happen.
6. A HELOC can help you buy a second home or investment property
A HELOC can help you buy a second home by giving you access to the down payment funds needed to buy to purchase the property. Typically, a second home requires at least a 10% down payment.
Using a HELOC for the down payment of a second home or investment property may be a good solution if you do not have cash on hand. Renting your property as an Airbnb may even offset your costs of ownership.
7. A HELOC can provide you with a flexible source of credit.
A HELOC can provide you with a flexible source of credit, which can be helpful if you need to make a large purchase or if you need to cover an unexpected expense.
A HELOC also allows you to borrow only what you need, which can help you save money on interest since you only pay on what you owe. As you pay down the principal balance, your monthly interest drops.
8. HELOCs can help you avoid selling investments during a down market
The number one rule to investing in buy low and sell high. A HELOC can help you avoid selling investments during a down market because you can use the line of credit to pay for your living expenses.
This will allow you to keep your investments and avoid having to sell them at a loss. Since stock markets go in waves, you can plan on selling the stocks to pay down the HELOC when values are higher.
9. HELOCs can be used to pay for a wedding
A HELOC, or home equity line of credit, is a great way to finance a wedding. With a HELOC, you can borrow against the equity in your home with affordable payments for large expenses such as a wedding. Weddings can be very expensive and if don’t have cash saved then using increased value in your home to cover the expense may be a great option.
10. HELOCs can be used to start a business
Ever hear the saying, it takes money to make money? When it comes to starting a business, this may be the case. A HELOC, or home equity line of credit, may be the solution to starting a business.
This type of financing is often used by small business owners because it can be used as needed and can be repaid over time in affordable monthly installments. HELOCs can be used for a variety of purposes, including working capital, equipment purchases, and expansion.
How to get a Home Equity Line of Credit
If you want to access the equity in your home without having to refinance your low rate mortgage or sell your home, then a HELOC may be the right fit. You may be able to borrow as little as $25,000 or up to $500,000 depending on your home’s value.
The first step is to speak with a mortgage broker or apply online to get started. There is no application fee and many times no appraisal required. Call 800-555-2098 or complete submit the form below.