8 Reasons to Get a Home
Equity Line of Credit
If you’re wondering about home equity line of credit (or HELOC) uses, the list is really endless. A home equity line of credit is a great way to tap into the equity in your home to fund renovations, as well as pay for any other living expenses.
The best part is that a home equity line of credit is a form of revolving credit so you can choose how much money to use at any one time. Read on to find out about the most popular home equity line of credit uses.UCCU Home Equity Options
1. Home Renovations and Repairs
Upgrading your home has to be the number one of all home equity line of credit uses, and with good reason. If you use your home equity line of credit to “substantially improve your home,” the interest you pay on the funds may be tax-deductible.
Reasons a home equity line of credit is a great way to improve your home:
- It may take you a long time to save up the money for costly items such as a new bathroom or kitchen so a home equity line of credit lets you get the job done sooner.
- Because a home equity line of credit lets you borrow multiple amounts over your draw period, it’s also a great way to deal with ongoing repairs, like replacing a broken appliance or upgrading old plumbing and gutters.
- Renovations and remodeling mean you get a better experience living in your home while also adding to its resale value.
Note: Check with your financial advisor to make sure your renovations and financial situation meet the tax-deductible criteria.
2. Education Expenses
Whether you or your child are going to college or pursuing vocational training, the costs can quickly add up. You might find you need a combination of grants, scholarships, savings, and loans to fund a full educational experience.
You can use your home equity to pay for any education-related expenses, including:
- Books, resources, and tech
- Living and transport costs
3. Medical Expenses
With or without insurance, health care can be costly and you never know when you or a family member may get a sudden illness or be involved in an accident.
Luckily, a home equity line of credit means you’ll always be able to cover your out-of-pocket medical expenses, such as:
- Co-pays for your insurance plan
- Out-of-network specialist visits
- Emergency Room visits
4. A Dream Vacation
Home equity uses include the fun things in life, too. While you can probably afford a night out or a weekend away now and then, what about that two-week holiday on your bucket list?
You can use your home equity funds to cover costs like:
- Flights and local transportation
- Hotels and other types of accommodation
- Regular meals and special dinners
- Shopping for souvenirs and travel extras
Note: Be sure to get travel insurance so you don’t need to use more of your home equity line of credit to pay for foreign medical costs or canceled flights! You can also start Savings Goals to help save for vacations too.
5. A Wedding or Family Celebration
Weddings, funerals, and parties for significant birthdays all come with their own specific costs. A wedding alone may run into tens of thousands of dollars – and who doesn’t want the best for their children on their special day?
You can use your home equity to pay for expenses such as:
- The wedding dress, suit, and ring, or any other clothing needed
- The wedding cake and catering, or any other food needed
- The venue and transport costs
- Any talent you might hire, like a singer or musician
6. Investing in a Second Property or a New Business
As the saying goes, you need money to make money. So if you have your eye on a potential property or have a great idea for a start-up, a HELOC could give you the funds to put your idea into action.
You could use your home equity to pay for:
- The down payment on a second home
- The capital for a new business
- The seed money for an exciting new venture
Note: Because your house is collateral for your home equity line of credit, make sure you crunch the numbers before you make a risky investment and be sure you’ll be able to pay back all the funds even if the venture doesn’t succeed.
7. Debt Consolidation
If you have multiple credit cards and loans, you’re probably finding it challenging to juggle all your monthly payments – and you’re probably paying more interest than necessary.
With a home equity line of credit, you can pay off all your other debts and get one simple monthly payment at a more competitive interest rate. Debts might include:
8. Emergency Fund
One of the best features of a home equity line of credit is that if you don’t use any of the funds, you don’t have to make any repayments or pay interest. So it’s an ideal tool to keep on your belt for a rainy day.
Uses for a home equity emergency fund may include:
- Car repairs
- House and property repairs
- Dental and vision expenses
- Sudden travel to visit a sick friend or relative
Home Equity Line of Credit Uses Compared to a Home Equity Loan
Now that you know all the great reasons to get a home equity line of credit, you might feel ready to take the next steps. Click below to find out more!Home Equity Loan vs. Home Equity Line of Credit: How Are They Different
- Home Equity Fees and Terms Explained