5 Ways To Use A Home Equity Loan

[Jan 9, 2010.]

 

Following are five ways you may be able to use the equity in your home. Home equity loans are cheap loans with interest rates starting near 3.25%. Home equity loans can be quick loans, with approvals often in less than 30 days. See if any of these ideas will work for you.

Home Improvement - Do you need a kitchen or bath remodel? Maybe the roof is leaking or the heater no longer works. A home equity loan is a very appropriate way to make home repairs, remodel, or even do an addition. Using the equity in your home to add value to your home makes good financial sense.

Debt Consolidation - Most interest rates on credit cards are very high. A home equity loan interest rate might be about 3.25% compared to a credit card at 18% or higher. If you have ever missed a payment, chances are your interest rate was increased. You may also be paying big fees every month if you are over your credit limit. If you have equity in your home, consider using it as a debt consolidation loan. Interest rates on home equity loans are normally much cheaper than interest rates on credit cards.

College - Sending your kids to college can be a very big expense. Home equity loans are cheap loans. Compare the interest rates and terms of student loans to the interest rates and terms of a new home equity loan. You may find that using the equity in your home to fund higher education is actually cheaper.

Start Your Own Business - Using equity from your home to start a business is very risky. More than 75% of all new businesses fail within the first three years. If you think you have an idea for a business and all that it takes to make it successful, a home equity loan may be less expensive and easier to get than a business loan. Many times you cannot get a business loan until the business is actually already making money. So a home equity loan can be a good alternative for making the dream of self-employment a reality.

Medical Expenses - Hopefully you will never find yourself in a serious medical situation. If you do, and you need a doctor's care, a home equity loan could contribute to saving your life. Medical insurance claims are tricky and can be refused. Your doctor may recommend treatment that you need to pay for outside of your medical insurance. Having a home equity loan in place for such a need can be a real comfort.

 

About Author:

Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.