Your home is probably your biggest asset. Have you ever thought of using the equity in your home to finance other “stuff”?
A home equity line of credit, or HELOC as we call it in the banking world, allows you to borrow money against the value of your home. It works like a credit card, you withdraw money as you need it> The difference between plastic and a HELOC is a home equity line of credit carries a low interest rate and is tax deductible. Win-Win!
5 Situations where a Home Equity Line of Credit makes sense:
Consolidating your debt Are you saddled with high credit card balances and swimming in the monthly interest they charge? Consolidating your credit card debt and paying it off with a home equity line of credit is a great way to reduce your monthly payments and save you from the interest.
Home Improvements Tapping into a home equity line of credit is a good idea if you want to make home improvements that will increase the value of your property. Adding square footage to your home with an additional bedroom, or replacing windows or siding, or remodeling a kitchen or bath are solid investments.
Life Happens/ Emergency Funds Life sometimes throws you a curveball. There are time when we are faced with unexpected expenses such as medical bills or huge home repairs. A home equity line of credit is great in such circumstances because it allows you to borrow only what you need to get you through the crisis.
Car Payments: Why pay all that interest to a car company or bank and get nothing in return? Why not pay yourself back by using the equity in your own home? It’s tax deductible and a smart move.
Realize your dream: A home equity line of credit can be used to start a business, or to purchase an additional investment-making property. It can also be used to pay for college costs, to get a new degree or certificate that will increase your income, a second home, vacation home, traveling, or to cross things off your bucket list… you’ve earned it, use it while you can.
At Litchfield Bancorp we know that financial banking decisions aren’t always simple. Do you think a home equity line of credit might be good for you? Give me a call at 860-274-7467.
Stephen Yonych Jr.