As the weather begins to warm, you may be thinking about your summer plans. Are you hoping to take a much-needed vacation with the family, basking in the sun next to your dream pool, or even catching up on your summer reading in your new sunroom?
Planning the summer of your dreams is easy. But funding the summer of your dreams may be a bit more difficult. However, your home could be the perfect financial option!
Let Your Home Do All the Work
Is your home worth more than you paid for it? The difference between what it’s worth and what you paid or currently owe is known as equity. And, you can borrow against this equity with a Home Equity Line of Credit (HELOC).
Review the Following Example to Understand Your Home’s Equity:
VALUE OF YOUR HOME: $250,000
AMOUNT OWED ON HOME: $200,000
EQUITY: $ 50,000
In the above example, you owe $200,000 on your home, but it appraises at $250,000. This means you have $50,000 of equity in your home. You are able to borrow this equity with a HELOC. However, you may not be able to borrow all $50,000 of your equity. Other credit factors and lender limits are included in determining the exact borrowed amount.
You’ll be able to use these funds to pay for some of those summer plans you’ve been dreaming about. Plus, if you use the equity to make improvements to your home, you could increase the value of your home even more.
The Benefits of a HELOC
A HELOC is a line of credit, meaning you will have access to your funds as you need them. With a HELOC, you only pay back what you use of your line of credit. Think of it as a credit card. If you’re approved credit card limit is $10,000, but you only spend $1,000 – you only have to pay back the $1,000 (the other $9,000 is still available to use if and when you need it).
With a HELOC, you have the flexibility to use your equity when and how you want.
- Home Improvements / Remodels
- Paying for a Well-Deserved Vacation
- Consolidating Debt
- Financing Your Child’s College Expenses
- Medical Expenses
The possibilities are endless. Plus, since HELOCs are secured loans, the interest rates are typically much lower than unsecured loans (i.e., Personal Loans or Credit Cards).
Getting Started
If you’d like to learn more about Home Equity Lines of Credit or would like to apply for one, stop by any branch location or give us a call at 800-343-6328. Our Home Loan Experts are ready to help!
Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.