As a homeowner, you will need to make updates and improvements to your house at some point. Home equity, or the difference between your remaining mortgage and what your home is currently worth, is an excellent source of funding for your remodeling project and other expenses.
For example, if your home’s market value is $200,000 and your remaining mortgage balance is $100,000, you have earned around $100,000 in equity. Let’s explore why using home equity for renovations and other expenditures is a wise move.
Loan Options
You can choose between applying for a home equity line of credit (HELOC) or a lump sum home equity loan. A HELOC is similar to a credit card, where you are approved for a certain limit and may borrow funds and pay for them during a specific repayment period. A one-time loan is typically taken out by those needing funds for a major property improvement project or a big-ticket purchase, such as a car.
Secure and Affordable Financing
You can get the funds you need with lower home equity loans or HELOC rates than personal loans or credit cards. This can help you save money in the long run.
Growing Your Home Equity
Additionally, your upgrade or remodeling project will further increase your property’s overall value, giving you satisfaction while raising its equity. Keep in mind that you must choose the right improvements that yield a high return on investment to achieve this.
Potential Tax Advantage
You may be able to have a tax write-off on your home equity loan interest if the funds were used to substantially improve your home. Please consult your tax advisor to see if this can apply to your situation.
Flexible Financing Option
A HELOC provides more flexibility, as it allows you to decide when and how much funds to borrow. You can draw upon funds as needed and then pay for your outstanding balance within the repayment schedule.
Fund Major Life Expenses With Your Home’s Equity
Maximize one of your biggest investments—your very own home—to secure funding, make life easier, and help you pay for your and your family’s needs. Contact Heartland Credit Union today to access a home equity loan or HELOC funds.
