HELOC or home equity line of credit is a big help for most people. This helps you use your home’s equity and borrow against its value. HELOC funds can be used for pretty much anything as long as you don’t forget that your home will serve as the collateral here.
Below are top reasons to use a HELOC:
Pay Off Existing Debts
HELOC may have a lower interest rate than some credit card debts with high-interest rates that might leave you struggling. You can make your payments simpler and lower your interest costs if you consolidate all of your higher-interest debts and pay them off with your HELOC.
Home Improvement Projects
It is probably one of the most common and popular uses for a HELOC. You can increase or maintain your home’s value through home improvements in the form of repairs and renovation. There are several home improvements known to give greater returns on investments such as kitchen remodels, siding replacement, bathroom remodels and additions, space repurposing to add to your home’s square footage, and energy efficiency improvement. Meanwhile high-end remodels or pool installation might not give the best ROI.
Tuition and Other Educational Payments
A HELOC can also help you with better management of the costs related to a college education or private school for younger children. Your home equity line of credit also lets you access funds whenever you need them the most. You could borrow when due to the tuition payment comes and pay it later and borrow once again if another expense arises.
Long Term Care Expenses and Medical Bill Payments
Health is one of the biggest issues in most countries across the world now more than ever and sadly, not all people are backed by reliable health insurance. It can lead to colossal amounts of medical bills. If your budget is limited, you need to search for other ways to pay your medical bills. This is yet another instance when a HELOC can come in handy. You can use this to pay your medical bills and pay them off later on.
It also applies to long term care expenses. Most people have elderly parents who live longer and require long-term care that can be a serious expense for the family. You can also pay for such expenses with the help of your home equity.
Down Payment for a Second Home or an Investment Property
A lot of people don’t realize that they can actually use a HELOC to help them buy a second home or investment property. If you already built up plenty of equity in your existing house and you want to raise some funds for a down payment for another property, the most logical solution lies with a HELOC.
Extra Cushion for Emergencies
There are times when unexpected things happen and you end up with a financial emergency. Your furnace might have died down, your roof developed a major leak, and your car needs some serious repairs. In cases like this, it wouldn’t hurt to have available funds that can help you pay for these unforeseen events with no need to use up your savings.
These are just some of the top reasons to use a HELOC. Make sure you use it well to make the most out of your home equity.