Three Ways You Can Use Your Home Equity Line of Credit

[Dec 29, 2008.]

 

One of the advantages of owning a home is that you can tap into your home's equity for your growing needs. Fortunately, a home equity line of credit makes accessing these funds even easier than ever. Compared to refinancing your home loan or a traditional second mortgage, the flexibility of a home equity line of credit offers many benefits. With a home equity line of credit, you'll be given a credit line much like a credit card and have funds ready for your future needs.

Here are some common uses and practical ways homeowners can take advantage of a home equity loan.

1. Cover the Cost of Ongoing expenses
If you currently have ongoing expenses, a HELOC can help cover these costs and give you the flexibility of paying interest only on the money that you borrow. Whether you need the money for ongoing medical expenses or a child's college education, a HELOC can provide you that safety cushion you need for the future. In many cases, the interest rate on your home equity loan could save you a considerable amount of money compared to other alternatives of financing.

2. HELOCs Can Make Home improvements Possible
If you've every tried to remodel a bathroom, upgrade your kitchen, or add an extra bedroom, you know that home improvements can bring many unexpected costs. With a home equity line of credit by your side, you'll have an easy access to funds to help you cover the costs of these improvements. With a traditional second mortgage or home equity loan, you'd have to anticipate the money you need long before the improvements begin. With a HELOC, you'll have access to a check book and an account linked to the equity in your home.

3. Consolidate Your Debt With a Home Equity Line of Credit
If you've been struggling with credit card debt or other liabilities, a HELOC can help you consolidate your debts into a single account with one easy monthly payment. Although a HELOC is still considered debt, the interest rate on credit card debt can sometimes be double that of a HELOC. Just remember, if you decide to consolidate your debt using a home equity loan, the loan will be secured by the equity in your home and the home itself. This should be a careful consideration as transforming unsecured debt into secured debt could carry severe consequences if you miss any payments.

 

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.