5 Ways to Use a Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit (HELOC) allows homeowners to borrow money against the equity in their home. HELOC’s can be used for a variety of purposes to help accomplish a range of goals related to your home.

With a HELOC, borrowers who require standalone and second mortgage financing may obtain a fixed Annual Percentage Rate for the initial term of the loan, followed by a rate based on the current Prime index for the life of the loan. By combining a traditional first mortgage with this second mortgage program, borrowers may potentially avoid higher-cost non-conforming financing options as well as private mortgage insurance, all while giving them access to funds for their current needs.

While most often used for home improvements or to consolidate high-interest rate debt, a HELOC can be used for so much more. We’ve put together a guide outlining some of the things that a HELOC can help you accomplish:

Home Improvements

HELOCs are commonly used to increase the value of a property – from renovations to upgrades to general preparations for selling your home.

Consolidating or Paying Off Debt

Another popular use for a HELOC is to consolidate high-interest rate debt, pay off your mortgage, repay student loans, and pay off credit card or medical debt.

Retirement

Whether you’re planning ahead or living in retirement, a HELOC can help you meet a variety of cash needs including making accessibility upgrades to your home, putting a down-payment on a rental property purchased to help produce retirement income, or mitigating unexpected downturns in the stock market negatively impacting your retirement savings.

Emergency Funds

HELOCs also provide flexibility in dealing with unexpected cash needs. Whether you need to take unplanned time off from work or pay for unanticipated repairs to your home or car, a HELOC gives you peace of mind knowing that you don’t need to deplete your savings or retirement accounts.

Personal Purchases or Investments

A HELOC is the perfect solution for any large purchases or investments you want to make like a summer or vacation property, a once-in-a-lifetime vacation, a wedding, or education for yourself or your kids.

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What is a home equity line of credit?

A home equity line of credit lets homeowners borrow money against the equity in their home. They are often used for home improvements or to consolidate high-interest rate debt. Borrowers who require standalone and second mortgage financing may obtain a fixed Annual Percentage Rate for the initial term of the loan, followed by a rate based on the current Prime index for the life of the loan. By combining a traditional first mortgage with this second mortgage program, borrowers may potentially avoid higher-cost non-conforming financing options as well as private mortgage insurance, all while giving them access to funds for their current needs.

Resources

We’ve created a library of resources to help answer any questions you may have about how a HELOC can be used to help accomplish your homeownership goals. Whether you’re trying to make improvements to your home or thinking about retirement, visit the links below for more details about HELOCs:

If you have any questions about HELOCs don’t hesitate to reach out to our Residential Lending team or get a rate quote today!