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If you are a homeowner facing a tight financial situation, you're not alone.
Right now, costs are rising across the board. In fact, they're rising all over the world. The microchip shortage has cars and electronics prices going up. The war in Europe has gas and food prices going up. The post-pandemic shipping delays are causing shortages and cost increases in every sector. Most people are checking their bank accounts and tightening their belts, but for some, the situation may be more urgent.
If the current recession conditions came at a bad time for you, you may be looking at home repair bills, college tuition, tax repayment, debt, or an unplanned expense in a time where there's not a lot of financial margin to cover the costs. However, as a homeowner, you may have access to more financial capital than you realize. Tapping into your home's equity can be a smart way to temporarily extend the length of your home repayment in order to resolve the financial problems you have today. A HELOC, or Home Equity Line of Credit, can help you take out exactly as much as you need from your current home equity and restore your household's financial equilibrium.
What is a HELOC? Tapping Into Your Home's Equity
Your home equity is the amount of money that you've already paid into owning the house - minus whatever percentage was interest to the lender. A line of credit is not a typical loan, but more like a credit card where the limit is your total amount of equity on the house.
So, let's say you own a $250,000 house and have built up $75,000 in equity through mortgage payments over the last few years. You can access all or some of that equity with a HELOC to spend on home repairs, renovations, or other pressing household expenses.
The benefit of a HELOC is that, because it's a line of credit, you spend only what you need without extracting (or needing to predict) the full amount of your current temporary expenses.
What Can You Use a HELOC For?
The funds from a HELOC can be used for anything you need, it's your equity and your money to spend. However, there are a few categories of household expenses that are more often - and quite wisely - paid by a HELOC when the need is greatest.
Home Repairs and Renovations
In any economy, HELOCs are most often used for home repairs, rehabilitation, and renovation. This is because the equity money you take out goes right back into the value of the house. If you need emergency repairs after a storm, to get your AC working in the heat of summer, or to make improvements that will increase the value of your home, then a HELOC is a practical source of funds to take care of the house itself.
Debt Consolidation
The last few years have been hard on many people. You can pay off all your creditors at once with funds from your home's equity, then go back to pleasantly paying off your house without constant harassment from credit cards, billing departments, or debt collection firms.
College Tuition
When your kids are ready to go to college, why wait? A HELOC is a way to plan for the future by extending the time it takes to complete paying off your home. If you want to send your children to university on time, a HELOC can help pay for tuition, books, boarding, and other related expenses.
Medical Bills
Sometimes, medical emergencies happen and there's nothing you can do about it. With or without insurance, medical bills from emergency situations are among the most common sources of household debt. If you need to deal with old medical bills or take care of a current medical emergency, a HELOC can help you make it through without building up the bad kind of debt.
Back Taxes
Many people got behind on their taxes during the pandemic, and a HELOC is a smart way to quickly make it right with the IRS without hassle.
Emergency Household Expenses
Emergencies are something you can't prevent, and often can't predict. If your household is going through any kind of costly emergency and you need funds right now, a HELOC can help you make it through the rough patch and return to equilibrium by accessing your home's equity for temporary reprieve.
Tap into Your Home's Equity for Financial Stability Today
Taking out a HELOC is a smart way to deal with a financial crisis right now by turning it into a more comfortable repayment of your home equity loan. Tap into your home's equity for money you've already put in to avoid the risk of temporary financial hardship. Contact us today to consult on the right HELOC for your situation, and to discuss more about how we at First Savings Mortgage can help.