Whether you want to get a home equity loan to pay off loans with a high interest rate, or you want to open up a home equity line of credit (HELOC) to have money available to you if you need it, the equity you have in your home can help you in a wide variety of ways. A line of credit is a loan where the lender agrees to lend you up to a maximum set amount of money within a certain time period. You don't have to access the entire amount during the length of the loan, but you'll have the ability to do so if you want to.
When Your Overall Debt is Growing
A good reason to access your home equity is when your overall debt is growing. If you have high interest credit cards because of bad decisions, it can be impossible to get the credit cards paid off. A home equity line of credit is a loan that is generally around 5% interest or lower. You can find a good deal if you look carefully for the right lender willing to give you a HELOC at a fair rate. When you borrow at 5% and pay off credit cards that have interest rates going out of control, your debt will no longer be growing.
When You Need an Emergency Repair
Home equity lines of credit are often used to take care of expensive emergency repairs for your home. If your furnace needs to be replaced or your roof is no longer effective, you can access your HELOC to take care of the problem. Many home owners keep some equity in their home for this type of an emergency.
Other Ways to Use a Home Equity Line of Credit
A home equity line of credit can also be used to pay for college tuition, purchase a new car, or to even take a trip you've always wanted to take. If you want to upgrade your home, you can invest in your property by making the changes using the home equity line of credit. One big reason to own a home instead of renting a space is to build equity and have an investment that is yours.
When you want to get out of high interest debt or you need to come up with quick cash for a home repair emergency, it's to consider your home equity line of credit options