4 Most Common Uses For A HELOC
Now that you understand the basics of a home equity line of credit, you might be wondering: How can I use my Bethpage HELOC?
A home equity line of credit can provide you with flexibility and access to capital when you need it the most. Consolidating debt under one loan can help clean up your credit score and lighten the burden of many creditors and high interest rates.
Life is full of major milestones like children going off to college or planning a wedding, but those events come at a price! If you lack the cash on hand to finance those expenses, a HELOC can help you use the equity in your home to cover costs. As we will discuss, one of the benefits of a line of credit is that unlike a home equity loan, you only spend what you need. Sound convenient? We think so, too.
Let’s break that down: When you take a $10,000 home equity loan against your house, you’re responsible to pay back the entire amount, even if you only use $8,000. HELOC is a more efficient way to pay for projects that may come in under budget. With good planning and a little spending discipline, lines of credit let you borrow as you go.
At Bethpage Federal Credit Union, our experts can sit down with you to determine whether a HELOC is the right solution to pay for expenses in the near or distant future.
A HELOC functions much in the way that any other line of credit works. Here are some of the popular ways they are used:
Maybe you need to build an addition to help fit your growing family. Perhaps your dated kitchen is an eyesore from the 70s that needs to go. Either way, large home improvement projects come with a huge price tag. The benefit of using a HELOC to make home improvements is that the money you spend is directly re-invested in the value of your home.
Student loans, credit cards, auto loans: If you owe creditors from a variety of different areas, you can pay those debts with a HELOC. This basically shifts them to your home, so what you owe is under one roof. This reduces the number of bills and payments you’re responsible for.
Consolidating debt with a HELOC should be done with the guidance of a financial planner, who can determine whether it makes good sense for you at this time. At Bethpage, we can help you make that decision!
Weddings and celebrations
Weddings may be beautiful, but they’re not cheap. A HELOC can be a solution for brides, grooms and their parents to access the necessary money to plan a perfect wedding. The pay-as-you-go system is great when there’s a chance you’ll spend less than you anticipated.
For that reason, it’s important to operate within a budget when you use HELOC funds to pay for a one-time event. Unlike using your line of credit to finance home improvements, you’re unlikely to see a return on this expenditure. But the wedding photos? Priceless.
College is an investment that you make in a child, whose degree will allow him or her to become a full-fledged, independent adult.
As your son or daughter prepares to head to school, financing college presents a number of options, including student loans. Rather than borrowing from outside your current assets, HELOCs allow homeowners to use the equity they’ve invested in their homes to make payments for higher education.
Because the funds can be used at a homeowner’s discretion, they can also provide availability to capital for incidentals like books, clothing and other expenses that pop up along the way.
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