Tapping into home equity is an often-overlooked way of funding projects and expenses. Home equity loans and home equity lines of credit (HELOCs) are a relatively easy and cost-effective way of paying for home improvements projects and life milestones, consolidating debt, and funding a number of other investments. Check out these four options for making the most of a home equity loan or HELOC.
1. Home improvement
Home improvement projects are one of the most common ways to use a home equity loan or HELOC. Whether you’ve been dreaming about adding a porch or pool, renovating your kitchen, finishing your basement, or building an addition, using your home equity can make it a reality.
2. Life milestones
Big life moments, such as weddings, higher education, big family trips and an expanding family, often come with big price tags. Since the interest rate on home equity loans and lines of credit are often lower than the rate on many other loans, such as unsecured personal loans and student loans, tapping into your home equity can be a more cost-effective way to pay for and enjoy life’s big moments.
3. Vehicles and recreational equipment
Similar to paying for big life milestones, you can use a home equity loan to pay for vehicles and recreational equipment such as boats, snowmobiles, jet skis and RV campers.
4. More financial flexibility
There are several ways a home equity loan or line of credit can provide you with more financial flexibility and even strengthen your financial position. For example, they can make it easier for you to consolidate your debt into one monthly payment, often with a lower interest rate than your existing debt. This would make it easier to reduce your overall debt and not struggle to keep up with multiple payments.
Additionally, some life expenses are unpredictable, such as medical costs. Having a HELOC open can give you peace of mind knowing you have access to funds to pay for unexpected, urgent expenses. A great benefit of a HELOC is it allows you to use the funds on an as-needed basis, just like a credit card. This means you will only be paying back the principal and interest rate on the money you take out, not the full sum, ensuring you are only responsible for the money you have actually spent.
Using your home equity line of credit can be both a smart financial decision and an opportunity to make the most of your home’s value. Learn more about Bankers Trust’s competitive home equity and line of credit options and speak to your banker or a member of our team to tap into your home equity today!