The cost of living is on the rise, and while you may be tempted to lean on credit cards or expensive loans, homeowners have access to a cheaper option: a home equity line of credit, or HELOC.
HELOCs are loans provided against the value of your home. It is used as collateral in order to unlock lower rates. You can get a HELOC with a mortgage or as a stand-alone product.
What Is A HELOC For?
Common uses for HELOCs include home renovations, consolidating debt, or financial investments. You can even use a HELOC to refinance, or in place of a mortgage when buying a property.
HELOC For Home Renovations
If using your HELOC for renovations you are effectively reinvesting your home’s value. The hope is that by upgrading your home using equity, the value of your home will increase more than the borrowing costs.
HELOC To Consolidate Debt
If you have multiple debts, consolidating can simplify the process. Consolidating your debt this way ties it to your home. If you fall behind on payments, you could end up losing possession of your home, creating a worse situation than you had to begin with.
HELOC For Financial Investments
Accessing cash to invest in a skyrocketing stock might seem like a smart move. But no matter how much you stand to gain, there are serious risks associated with borrowing money to invest.
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