If you've built up enough equity in your home, you can convert some of it to cash to help you reach your financial goals. A home equity loan or home equity line of credit (HELOC) can help you pay for things like home improvement projects or credit card debt. While these are some of the most common ways your home equity can benefit you, there is more you can do with the equity in your home. When you borrow a portion of the equity in your home, it's important to be savvy, make a plan, and know all your options. That's why, we're sharing how to make your home equity work for you.
What is Home Equity?
Home equity is the amount of your home that you own (free and clear of financing) that grows over time — when you make payments on your mortgage.
1. Pay for Construction
Home remodels like kitchen and bathroom makeovers can cost a fortune. Using your home's equity can be a great choice to help you fund the work. Consider a HELOC for added flexibility, since you can borrow money when you need it and only make payments on the amount that you borrow.
2. Makeover Your Home's Exterior
Remodeling structures like garage doors, entryways, and exterior siding can make your home seem like new and add a lot of value if you ever decide to sell your home.
3. Pay for Medical or Care Costs
Medical, assisted living, and nursing home expenses can be extremely costly. Leveraging your home's equity can help pay for unexpected medical expenses or with the cost of long-term care, allowing you or your loved ones to maintain a comfortable and independent lifestyle as long as possible.
4. Pay for Educational Costs
Educational costs can add up quickly. Having a HELOC at your fingertips can be beneficial in helping you pay for tuition, room and board, books, learning tools like laptops or computers, and other costs as needed.
5. Make Your Home More Efficient
You can add serious value to your home without undertaking a large remodel by adding specific features to your home. Improvements like replacing older appliances and adding energy efficient features are smart ways to utilize the equity in your home.
6. Fund A Special Project
The equity in your home can be used to fund specific projects that are important to you. A HELOC or Home Equity loan can help you start a new business, restore a classic car, make boat repairs, and more.
7. Pay for Wedding or Honeymoon Expenses
While you should always adjust your budget and try to limit spending for wedding or honeymoon expenses, it might make sense to take out a HELOC or Home Equity loan to cover these costs.
8. Create a Buffer for Emergencies
Using the equity in your home to open a HELOC can be helpful in case of emergency. With a HELOC, you'll be afforded a revolving line of credit that you can use whenever you want. Most HELOCs can be used for up to 5 to 10 years (referred to as the draw period) and you only need to pay back what you use. Meaning, if you never touch the funds, you never have to pay interest.
Find the Right Option for Your Needs
Home Equity Line of Credit (HELOC) vs. Home Equity Loan (HELOAN)
How it Works |
HELOCs function like a credit card with a limit based on your home's equity. | HELOANs function like a mortgage with a loan amount based on your home's equity. |
How Your Receive Money |
Draw funds as you need them. | Receive one (1) up-front lump sum. |
Interest Rate |
Variable Interest Rate | Locked-in Interest Rate |
How You Repay the Loan |
Make payments only on the amount that you actually borrow and not the full amount available. | Fixed payments of principle and interest. |
What is it Best For? |
Recurring expenses like tuition, medical bills, and home improvement. | Nonrecurring expenses like major home renovations and consolidating debt. |
Rates, terms, and conditions are subject to change and may vary based on credit worthiness, qualifications, collateral age, and conditions. The APR will be disclosed prior to an advance being made on a loan.
Home Equity Disclosures: Home Equity Early Disclosure & What You Should Know About HELOCs.
MORTGAGE LOAN OFFICER IDENTIFIER LISTING.
RESOURCES
« Return to "Blog"
Share on Facebook: How to Make Your Home Equity Work for You 
Share on Twitter: How to Make Your Home Equity Work for You 
