Putting Your Equity to Good Use
There are many reasons to look into applying for a home equity loan. Consumers all over the U.S. take advantage of this relatively simple way to access cash reserves. Though it’s important to be prudent and responsible with the money, after all, a low interest line of credit is still an additional expense you are incurring to tap the value in your home. Some decisions can further increase the value in your home, and others can provide a desperately needed break from the grind of life. After reading the potential uses below, stop by Home Equity Wiz to further educate yourself on the specifics involved with both home equity loans and a line of credit.
Making Worthwhile Home Improvements
There’s really no better reason to use home equity funds than to further boost the value of your home. Such a move makes both logical and financial sense, and is one of the most popular reasons that people utilize these types of loans. People should keep in mind, however, that “worthwhile” home improvements are ones that are almost guaranteed to ramp up a home’s value. Redoing one’s kitchen is typically considered to be one of the top items that will provide the highest return on your investment. Whereas, a finished basement tends to have the lowest dollar-for-dollar return on your investment. Of course it all depends on how long you plan on living in your home and what’s most important to you in regards to your quality of life.
Funding Relevant Education
Homeowners who want to complete a college degree, earn a master’s degree in their professional field, or take a job-related series of courses often turn to home equity for the solution. Again, the key thing to remember is that the education should increase your market value or salary directly. Using a HELOC to earn degrees that have no impact on your future or current earnings doesn’t make a lot of sense. However, millions of homeowners have leveraged home equity cash to earn MBA degrees or similar professional diplomas that translate rather easily into higher earnings.
Consolidating Debt at Favorable Interest Rates
Generally viewed as not only one of the most common but also smartest ways to use home equity money, debt consolidation can save homeowners many thousands of dollars. When the debt consolidation involves high-interest credit cards and/or unfavorable loans, then a HELOC can instantly reduce expenses and help people get back on the right financial track.
Paying for Emergency Expenses and/or Assisted Living
Among the most commonly cited reasons for getting home equity loans are “emergencies.” This category includes paying for assisted living costs, medical bills, catastrophic losses to property, and similar one-time burdens that everyone can fall victim to.
Investing in Lucrative Ventures
Investing for the sake of “playing the market” or following a “hot stock tip” is not the idea. But funding the purchase of a rental property that has the potential to not only make the home equity loan payment and pay monthly mortgage costs, then a HELOC could be a very smart move.
Taking a Needed Vacation
The operative word here is “needed.” It’s usually not wise to pull money out of your hard-earned home equity for a frivolous trip to some exotic locale, “just for the fun of it.” But if you and your family could use a short trip to ease the stress of a long stretch of work and minimal leisure time, then a HELOC might be the way to go for a relaxing vacation that recharges everyone’s batteries.