What is a HELOC you may ask? A Home Equity Line of Credit or HELOC is a revolving line of credit where you use the equity in your home as collateral. Equity is the difference between the appraised value of a property and the amount a homeowner owes on their mortgage. HELOCs typically have draw periods that allow borrowers to borrow against their line and repay what was borrowed during the repayment period.
You may have heard that HELOCs are only useful for home improvements or other large purchases, but they actually have a multitude of purposes. HELOCs have many uses that borrowers may not think of when first applying. Let’s explore what options a HELOC can give you:
Furthering Education: College can be expensive and often times many individuals find themselves browsing for scholarships or other financial assistance to help pay for housing, books and tuition. This can be costly and often have you accumulating various different loans. Using a HELOC allows you to consolidate the amount owed into one loan and pay over the draw period. Additionally, if there are unexpected expenses that occur, borrowers can make draws on their HELOC to pay for them.
Debt Consolidation: Managing multiple credit card payments and installment loans can become a hassle and may have you paying more in interest over time. Using a HELOC to consolidate debt can reduce the number of payments you are making per month and provide you with a potentially lower interest rate compared to multiple loans.
Stock Investing: Investing in the stock market using a HELOC can provide investors with an opportunity to diversify their investment portfolio that could reduce their overall risk. The stock market has ebbs and flows and HELOCs provide leverage to invest quickly because you will have access to funds you may not have on hand.
Prepare for the Unexpected: While many individuals have built up a savings account to pay for unexpected expenses, sometimes the unexpected can be outside of what you have built up. A HELOC can be a great way to pay for things like medical bills or car repairs and allow for you to build your savings account back up.
No matter what you choose, a HELOC has a multitude of purposes. It’s always important to consider your financial situation when deciding whether a HELOC is the right option for you. If you have questions or want more information regarding a HELOC, we are here and ready to serve you. Stop by a convenient location or call us at 1-833-372-4968 for more information.
