What Can Your HELOC Do For You?

Are you wondering how you can make the equity in your home work for you and your family?

A Home Equity Line of Credit (HELOC) can help turn your goals into reality. Using the equity you’ve built in your home, you can secure a revolving line of credit to help finance major expenses. HELOCs typically have low interest rates, flexible repayment terms, and even potential tax advantages. Here are five things you can do with a HELOC.

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Pay Off High-Interest Debt

If you have high-interest debt, like student loans, medical debt, and credit cards, consider consolidating with a HELOC. You might find a HELOC can help save you money on interest fees and simplify your money management by consolidating your outgoing payments.

Prepare for Unexpected Expenses

Unexpected expenses could be a disaster for your finances if you haven’t planned accordingly.

A good rule of thumb is to aim to have three to six months’ worth of living expenses saved. A HELOC can serve as a safety net should major unexpected expenses pop up. Since you only pay interest on what you use, you won’t owe any interest if you don’t use it. When life throws challenges your way, you might need to take time off of work to care for a family member or yourself. A HELOC can help provide you with peace of mind as you’ll be ready to cover your living expenses with ease, without having to drain your savings or dip into your retirement fund.

Bring Your Home Renovation Goals to Life

A popular way to use a HELOC is putting the money back into your home – especially if you can increase the value of your home while doing so. Kitchen renovations, bathroom remodels, and new flooring installations are a few home improvements that generally yield a good return on your investment (ROI). Remodeling a bathroom can offer up to a 70% ROI when it comes time to sell your home.

If you’re planning to stay in your home long-term to enjoy your renovations, a HELOC could give you the funds to create your dream outdoor entertainment space or turn your garage into a mother-in-law suite.

Fund Life Events

Credit cards and personal loans each have scenarios when they are the right solution for the job, but the flexibility and low interest rates HELOCs offer borrowers make them the superior option for financing weddings, college education, funerals, or once-in-a-lifetime vacations. If you’re preparing for a major life event, do your research or speak to a banker. Choosing the right solution could save you a substantial amount of money in interest charges.

Purchase Investment Properties

Rental properties are a savvy investment if you’re looking to generate an alternative financing strategy. You can use your HELOC to put a down payment on an investment property or vacation home to rent out and make a secondary income. It should be noted that mortgage insurance does not protect investments, so you should put down at least 20 percent on the property to obtain traditional financing.

How Do I Determine My Home Equity?

To estimate how much equity you currently have in your home, use our home equity calculator. If you would prefer to calculate your home’s equity manually, just subtract the amount you owe on all loans secured by your home (mortgage balance, home equity loans or lines of credit) from it’s appraised market value.

It’s important to remember when taking out a home equity line of credit or home equity loan, the collateral is your home. Make sure to budget well and not overextend yourself putting your home at risk. It’s wise to use a home equity line of credit or loan for long-term investments and major expenses rather than every-day spending.

For more information on home equity: what it is and how it works, check out Understanding Home Equity or come in and speak to a banker today.
1. What is the ROI on Remodeling a Bathroom? - Reno NV & CA | USA Bath

  • This content is general in nature and provided for informational use only. Content may be used in connection with the advertising and marketing of products and services offered by SouthState Bank, N.A. and its subsidiaries and affiliates. This is not to be considered legal, tax, accounting, financial or investment advice. You should seek individualized advice from personal financial, legal, tax and/or other professionals, as appropriate depending on the specific facts of your situation. We do not make any warranties as to the completeness or accuracy of this information and have no liability for your use of this information.

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