Is a HELOC Right for Me?
A Home Equity Line of Credit (HELOC) can be a powerful tool that, if used properly, can help you improve your finances. A HELOC is a type of loan that is secured by the value of your home. It’s a revolving line of credit meaning once you pay off the balance, the funds can be used again, similar to a credit card. Its flexibility and relatively low interest rates compared to other loan products makes it a popular option for homeowners needing funding. Whether you’re wanting to make improvements to your home, consolidate debt, or get funds to cover education, medical expenses, or vacation, a HELOC may be the right choice to help your financial situation. We’re here to help you figure out if a HELOC is the right move for you.
Improve or Upgrade Your Home
The most common uses for a home equity line of credit include the various ways you can put it back into your residence, whether you’re making home improvements for self-enjoyment or preparing to sell. Using the equity built into your home to make renovations, such as adding livable square footage or updating your outdated kitchen or bathroom, can increase your property’s overall value. Whatever your goal, a HELOC may be exactly what you need to get the job done.
Consolidate Your Debt
Trying to pay off multiple debt balances can leave you feeling overwhelmed. Large amounts of debt can sometimes feel like a prison, holding you captive from reaching your financial goals. With a HELOC, you have the ability to consolidate your debt into one lump payment, often with a lower interest rate than most other loans. Doing this can help to simplify your payments, because instead of owing multiple lenders and keeping up with several different due dates, you pay one lender with one due date. Not to mention, you can save quite a bit of money by reducing your interest rate. A HELOC may be the best move for you to relieve some of that stress and take back control over your finances.
Emergencies
The great thing about a HELOC is, once you open the line of credit, you can use it whenever it’s needed. When financial difficulties come out of nowhere, like the need to take time off work to care for a family member, you can use the funds to cover costs during that time. A HELOC can provide peace of mind knowing you have access to money in events of an emergency. Rather than having to tap into your savings, you can use the HELOC to pay for unexpected expenses. You can work on paying down the balance of your line of credit, and then have the ability to reuse it for something else later on since it’s revolving.
Education Expenses
HELOCs can be used to cover the costs of a college education when federal student loans may not be an option for you. While federal student loans have fixed, low-interest rates and offer benefits such as loan deferment and loan forgiveness, they have a cap on the amount you can borrow. A HELOC may provide the extra funding you need to cover tuition, housing, dining, and textbooks when you have maxed out your student loan options.
Medical Expenses
Health care needs can come up unexpectedly, and you may not have the funds to immediately cover the medical expenses that come along. If your insurance doesn’t foot the bill, you may find yourself looking to your home’s equity as a solution. This might make the most sense to avoid damaging your credit by having medical bills sent to collections.
HELOCs can be a great option for disciplined borrowers looking to take advantage of their home’s equity. When considering a HELOC, think honestly about your financial habits, the potential risks, and whether or not this product is the best fit for your needs. If you’re ready to take the next step, you can apply online, by phone, or visit any of our branch locations where one of our member service representatives will gladly help you through this process.
At Robins Financial Credit Union, our mission is to enhance the financial well-being of our members and community. We honor this commitment by providing educational content to help you make the most of your finances. Read our other blog articles to help you gain the financial knowledge you need to succeed.