You might have heard of a home equity loan, which is basically a loan that uses some of the paid-for value of your home as collateral, but you might have never thought about actually taking one out. However, there are many situations that can be funded by one of these loans. These are a few signs that you might benefit from talking to a banker about a home equity loan.
1. You Want to Make Improvements to Your Home
Borrowing against your home to improve your home can actually be a sound financial decision. Paying to remodel and update your home or to handle costly repair issues -- such as the need for a new roof or another costly problem -- can make it much easier for you to pay for improvements that you might not otherwise be able to afford. Plus, you'll be improving the value of your home, making it even more valuable if you decide to put it on the market.
2. Your Child is Going Off to College
If your child is going off to college, you might worry about him or her getting by with too little cash or taking out big student loans and graduating in debt. Since neither of these things are very appealing to many parents, a home equity loan can be a good decision. Then, you may be able to save on interest versus if your child were to take out student loans, and you may be able to borrow more money to help with your child's education. This can be an ideal way to help your son or daughter go to school.
3. You Want to Pay Off Other Debts
Taking out a loan to pay off other loans might not seem like the smartest decision. However, depending on your situation, it can be a good idea. For example, if you have a lot of credit card debt with high interest rates, using a lower-rate home equity loan to pay off this debt can save you a lot of money. You may also be able to reduce your monthly payments in this manner, which can be helpful if you are dealing with budgeting issues.
As you can see, there are a few different situations that can be funded with a home equity loan. If you have never thought about taking out one of these loans, now is the time to talk to a banker at your financial institution to determine if it's the best choice for you and what you and your family are dealing with or planning.
Share12 May 2016
When it comes to borrowing cash for a new house or a nice car, how much money do you really need? Although you might be tempted to mortgage yourself to the brim or borrow a little more than you should, the fact of the matter is that everyone has financial limits. My blog discusses the impact of borrowing more than you need, so that you can make smarter decisions with your money. In addition to keeping you out of trouble, this valuable information might also improve your quality of life and protect your financial future. You never know, it could make all the difference.
