What are the 10 Best Ways to Use a Home Equity Line of Credit?

Finding creative ways to use a home equity line of credit, or HELOC, gained significant traction in recent years. After faithfully paying their monthly mortgage premium, working families build up considerable equity they can use for a wide variety of purposes. If you would like to enhance your quality of life, address financial concerns, or need money to pay for an unexpected expense, you may be encouraged to learn more about how a HELOC works and how people like you are putting theirs to work.

What is a Home Equity Line of Credit?

A home equity line of credit, also known as a “HELOC,” provides a low-interest borrowing opportunity for qualified homeowners. The line of credit is typically secured against the difference between a property’s fair market value and what is owed. After an impartial appraisal is established, the outstanding mortgage balance and other encumbrances are deducted. That amount of equity can then be leveraged as collateral. Because a HELOC is backed by collateral, local lenders are able to offer qualified borrowers increasingly low-interest rates.

It’s also essential to understand that HELOC rates are variable. That typically means they are tied to the ebb and flow of the prime interest rate.  In many respects, a HELOC functions much like a credit card. Borrowers establish a line of credit limit with a lender, and they can withdraw against the amount during a set period of time.

Best Ways to Use a Home equity line of credit

1. Home Improvements

Using a home equity line of credit to make upgrades ranks among the most prevalent strategies. Home improvements such as new kitchens and expansive bathrooms improve quality of life and typically result in increased property value.

2. Home Repairs

Although homeowners insurance remains a standard element of owning a property, sometimes the damage is not covered. When you need the money for a new roof or restoration service, a home equity line of credit may be your best option.

3. Debt Consolidation

People with multiple high-interest credit cards or unsecured loans improve their financial portfolios through consolidation. A HELOC can be used to combine outstanding loan and credit card balances into one manageable monthly payment.

4. Education

A home equity line of credit can be used to help students with tuition, books, school supplies, room and board, and transportation expenses.

5. Paying for Medical Bills

In many ways, equity is a lot like a rainy day fund. When unanticipated medical procedures are needed, homeowners can secure a home equity line of credit to ensure they or their loved ones get the medical treatment and care they deserve.

6. Funding Investments

It’s not uncommon for financial opportunities to present themselves when you lack the cash on hand to benefit. You can use your home equity line of credit for a down payment on a second home, investment property, or other investment opportunities.

7. Starting a Business

Using a home equity line of credit to make upgrades ranks among the most prevalent strategies. Home improvements such as new kitchens and expansive bathrooms improve quality of life and typically result in increased property value.

8. Emergency Fund

People often talk about expecting the unexpected. But when an illness, injury, loss of a job, or another setback occurs, community members can find themselves in dire financial straits. A home equity line of credit can help you and your loved ones get through difficult times.

9. Vacation

Taking a once-in-a-lifetime family vacation provides lasting memories. Although no price can be placed on these experiences, a HELOC can make a dream vacation a reality.

10. Weddings

The cost of getting married has become prohibitive for some couples. But families who have built up years of equity do not necessarily have to cut corners. By utilizing the equity in your home with a HELOC, couples and parents can borrow the funds for the wedding of their dreams.

Where to Apply for a Home Equity Line of Credit

If you have equity in your home and you are looking for the most affordable way to borrow money, apply for a HELOC online or visit one of our branch locations for a Home Equity Line of Credit at CCCU.