Tips to Make the Most of Your HELOC
A HELOC, or home equity line of credit, is a revolving line of credit that’s secured by your home. It’s a flexible financial solution that can be used for home improvements, large expenses, emergencies, and even college tuition.
With so many options, you might be wondering how you can make the most of your HELOC. Here are some tips to maximize your HELOC.
Increase your home’s value
When planning home improvement projects, focus on those that increase the value of your home. Some projects can increase your home’s value beyond the cost of the initial project and increase your home’s value when it comes time to sell. If you’re looking for a return on investment, it’s always a good idea to examine current buyer interests, neighboring homes, and market trends. Investing in energy efficient upgrades like high quality windows and doors, adding square footage with a finished basement, or replacing an aging roof are great ways to boost your home’s value for years to come.
And even if you’re not planning on selling, certain home improvement projects, like a renovated bathroom, modern kitchen or new patio, can really add to your enjoyment of your home.
Perfect for emergencies
A home equity line of credit is also a great option for emergency expenses. If your air conditioner starts acting like your furnace, or your furnace starts acting like your air conditioner, a HELOC can soften the blow of sudden, expensive repairs.
And the emergency uses for a HELOC extend beyond the home. You can use your home equity line of credit to pay off unexpected medical bills or fund expensive vehicle repairs.
Plus, the flexibility of a HELOC means that you only pay interest on what you use. Unlike a traditional loan, which requires immediate payments, you’ll only make payments when you draw your HELOC funds, and during the draw period, your payments can be as low as interest-only.
Get more done with a repayment strategy
Your HELOC is a revolving line of credit. As you make purchases using your available credit, your total balance increases and your available balance decreases. Making payments will decrease your balance, freeing up more credit to use on purchases.
By paying off your balance as you use your HELOC funds, you free up more money to complete other home improvement projects. And with a HELOC, there’s no penalty for making principal payments during your draw period.
Draw what you need
During the draw period, you can access HELOC funds as needed. Unlike most loans, you’re only assessed interest on the funds you draw, so be sure to only draw when you need to. For things like home improvement projects, wait until the final invoice comes in before drawing your funds.
If you think a HELOC is the right solution for you, we’re here to help you get started.
