When you think of how a home equity line of credit (HELOC) loan is typically used, what probably jumps to mind are home projects and unexpected expenses, like replacing your home’s boiler or adding a garage to your property. But we at Community Credit Union (CCU) want you to know that there’s a world of opportunity beyond these traditional uses. In this blog post, we explore some unexpected ways to leverage a HELOC loan, empowering you to unlock the full potential of your home’s equity so you can make your financial dreams and goals a reality. But first, let’s review what a HELOC is and how it works.
What Is a HELOC?
When you finance a home, every time you make a mortgage payment and put money toward the principal, you build equity. Over time, if you make regular payments, the amount of equity grows. A HELOC is a loan that allows you to borrow against the equity you’ve accrued.
How Does a HELOC Work?
In many ways, a HELOC works a lot like a credit card or other revolving line of credit, where the loan (or credit) remains available to you over time, even when you pay the balance in full. You can withdraw HELOC funds as needed during what is called the loan’s draw period, which is typically 10 years. You must make interest payments on the borrowed amount, and any principal you pay back during the draw period is made available again. Once the draw period ends, the repayment period begins. At that point, you can no longer borrow against your loan and are responsible for making principal and interest payments until the loan is paid off. A typical repayment period is 20 years.
Three Smart Ways to Use a HELOC
Because HELOCs are secured by property, homeowners usually associate them with renovations, repairs, and other large financial expenses related to their home. But you aren’t limited to using HELOC funds for home projects. In fact, the possibilities with a HELOC are endless. Here are three examples of how you can use a HELOC loan to help you realize your dreams and achieve your financial goals:
- Consolidate high-interest debts. Paying down debt can be a stressful and daunting endeavor. A HELOC loan can serve as a flexible source of funds to help you consolidate and chip away at growing credit card and student loan debt, especially if they carry higher interest rates than your HELOC.
- Book a dream vacation. If you’ve been thinking about taking a trip, like a honeymoon, babymoon, or family vacation, but have been putting it off because you don’t have the funds to spend on it right now, a HELOC allows you to seize the moment and take the trip of your dreams without cutting into your cash flow or savings. Otherwise, you might need to use a high-interest credit card or a personal loan to finance the trip, which may end up making it more costly in the long run.
- Pay college tuition. Whether you are interested in going back to school yourself or have a child who is heading to university, a HELOC can be a great financial resource to have at your disposal. Federal financial aid often doesn’t cover the full amount of tuition, and private student loans can have high interest rates, so funds accessed from a HELOC can help fill in the gap.
Unlock the Full Potential of Your Home’s Equity with CCU
You’ve worked hard to pay down your mortgage and build equity. So why not put it to good use to help you create the life you’ve always dreamed of?
When you get a HELOC with CCU, you can borrow up to 75% of your home’s equity and take advantage of low interest rates, no origination fees, and minimal closing costs. Once you’ve set up your HELOC with us, you can easily withdraw funds through Online Banking, via HELOC checks, or at a local CCU branch location. Additionally, you are not required to have your first mortgage with CCU to qualify for our HELOC, which is not often the case with other financial institutions. Another difference between us and other financial institutions is that we offer HELOCs on second homes and investment properties, opening up a whole new world of opportunity.
The team at CCU is dedicated to serving the people, businesses, and families of Lynn, Peabody, Somerville, and the surrounding areas, including you and yours. We understand it can be overwhelming trying to determine how to make your money work for you so you can live the life you want, especially when cash might be tight or you’re working hard to save for the next big milestone in your life. We’re committed to providing the financial products and services you need to thrive and reach your financial goals today, tomorrow, and in the future.
If you’re unsure whether a HELOC is right for you and your financial goals, we’d love to help. Call our Mortgage Center at 978-968-2200 to discuss today’s rates, ask questions, and receive expert financial guidance and support from a dedicated member of the CCU team.