Home Equity Line of Credit - Tips on How to Make the Most of it

By: Terry Edwards

Without a doubt, your home is your biggest asset, and a home equity line of credit can help you take full advantage of it. When you stop to consider how much equity your home builds up over the years, it only makes sense to use it when you need it.

A home equity loan or line of credit will help you during times when you need financial assistance. Sure, you can go to your bank and try to get a personal loan, but at what rate of interest? Same with a credit card. You can easily be looking at a 12%-18% APR on these transactions, compared to an equity loan of 6% or & 7%.

The key is in how you will be using the funds with this type of loan or credit line. They are best utilized in these types of situations:

1. Medical emergency - A home equity credit line works well during times of unexpected medical emergencies, or even a funeral. It gives you a way to get the money you need, quickly and without damaging your credit.

2. Paying off debt - If you are trying to manage and pay off debts from credit cards, loans, etc. then a home equity loan makes sense. Pay off the high interest credit cards and loans, and pay it back with a low interest loan.

3. College expense - If you have kids in school then you know how expensive college can be. Even a community college will run in the thousands every semester. Using some of the equity in your home to pay these expenses can be invaluable.

4. Home remodeling projects - This is one of the best ways to utilize the funds from a home equity loan or credit line. Use the funds to build a new addition, or update a bathroom, etc., and further increase the value of your home. Not only do you get to enjoy the updates, but the benefits of adding more value as well.

These are some of the biggest reasons for getting a home equity line of credit.

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