A Home Equity Line of Credit (HELOC) is a popular way to take advantage of the equity a homeowner has in their house in order to accomplish some financial goals. With interest rates still at historic lows, repayment under this method could be more affordable than other loan types. Let’s take a look at a HELOC and see if it might be a great option for you.
What is a Home Equity Line of Credit (HELOC)?
A HELOC is a type of loan provided to a customer that is secured by the equity that exists in their home. Because it’s a line of credit, the borrower can utilize the loan over a long period of time. After receiving the funds from a HELOC, the homeowner can use them for any purpose.
Money Smart Ways to Utilize a HELOC
While homeowners are free to use the funds from a HELOC toward anything they wish, here are some ways in which borrowers have taken advantage of this kind of loan over the years.
HELOC for Home improvements
One of the most popular uses for a HELOC is home renovations and improvements. Using your home’s equity for such projects is a smart choice for many reasons. For one, the money you put into the upgrades can be seen as an investment in your property.
If you choose improvements that increase the home’s value, you could enjoy a return when you sell your house. Also, if you use the funds from a HELOC to better your home, you may be able to deduct the interest paid on the loan from your taxes (be sure to consult with a tax adviser).
HELOC for Debt Consolidation
Paying off high interest debt can be extremely expensive and difficult to manage. Even worse, the heavy interest rates mean more of the borrower’s money goes toward the lender and less to reduce the loan’s principal balance. Using a HELOC to consolidate debts into a low-interest loan can save several thousands of dollars and help shorten repayment time by many years.
HELOC for a College Education
When interest rates are falling, funding a college education through a home equity loan instead of a high-interest student loan can be an intelligent choice. Similarly, homeowners struggling to meet student debt payments without defaulting may consider using their home’s equity to pay off the debt quickly and replace it with a more manageable low-interest loan.
HELOC for an Emergency Fund
A HELOC could also provide some peace of mind while you are building up your emergency fund. You’ll have ready access to low-cost borrowing in a pinch, and the manageable repayment may still leave some additional capacity to grow your savings.
How to Get a HELOC Loan?
Simply apply! Our team of highly knowledgeable professionals are happy to help you determine whether a Home Equity Line of Credit is the right loan for you. We will discuss all of your options, so you can make a sound financial decision. Our team has also put together a HELOC Application Checklist to help get you started!
Contact Us Today!
Since 1934, Carolinas Telco Federal Credit Union has provided our members with the financial tools they need to accomplish their personal goals. If you are interested in learning more about how a HELOC could benefit you, contact us today.