5 Ways To Use A HELOC

Unlock the power of your home’s equity! By opening a HELOC, you can have a creditline at your disposal to accomplish more than just home improvement projects. Your home isn’t just where you live – it can be the financial tool you need to reach your goals.

What Is A HELOC

A HELOC is a line of credit secured by your home. Financial institutions will let you borrow up to a certain percentage of the value of your home, minus the amount you currently owe. This is called your home’s equity. To approve the loan, lenders will look at several variables, such as credit history, income and debts, and when you got your mortgage. Like a mortgagee, our home is collateral that the financial institution is guaranteed, so on-time payments are important.

When you receive the creditline, it becomes a loan where the interest rate can vary from month to month. Like a credit card, you can continue to draw from the line of credit as often as you want, as long as there is credit available. One difference between a credit card and a HELOC is that a HELOC usually has a set term with a variable interest rate. The term is how long you have to continuously draw from your home’s equity. Another difference is the rate itself. Even though it can change, it is usually significantly less than a typical credit card.

Ways To Utilize Your HELOC

Did you know you can use your HELOC for more than just home improvement projects? From consolidating debt to funding your next vacation, here are some ways you can use your home’s equity.

1. Home Improvement

The first and most obvious use of your HELOC funds is to reinvest in your home. You can complete a kitchen remodel, replace your roof, and upgrade your appliances to be more energy efficient. All of these projects can boost the value of your property, sustaining the long-term investment. Home improvement projects are the expected course of action when receiving a HELOC, but it is not the only solution.

2. Debt Consolidation

Are you trying to get your debt under control? An easy way to manage your debt is by consolidating it in one place. You can do that with a HELOC! Plus, depending on the debt you are trying to consolidate, it may be a better interest rate, saving you more money in the long run. For example, credit cards tend to have a higher interest rate compared to HELOCs. If you have several credit cards open, you can move the debt to your HELOC and make your payments in one place. Although keep in mind, your HELOC is a secured line of credit. If you can’t make the payments, you are risking not only your credit score, but also your house.

3. Education Expenses

College is expensive. Have you thought about covering tuition costs with a HELOC? Or, you can use a HELOC to cover the costs of books and housing. It’s another finance option available to you and your family, especially if the interest rates are better than federal and private student loan options.

4. Starting a Business

Invest in you! Use the equity of your home to launch your business idea. Once you get it off the ground, you can continue to use the flexible line of credit as your business ebbs and flows for the next couple of years. When you make a profit, you can put that money back toward the HELOC. It may be an easier way to start your business without going through the usual business loan channels.

5. Major Milestones

Every milestone deserves a celebration. Don’t let a lack of funds keep you from a party. With a HELOC, you can celebrate every major milestone and make payments on it later down the road. Most milestones are once-in-a-lifetime opportunities that don’t wait for your wallet. Don’t miss out on these kinds of events:

• Wedding
• Adoption
• Graduation
• Family reunion
• Vacation

More than likely, your next chapter can be funded by your home’s equity. Find a financial institution near you and open a HELOC.