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March 8, 2024
HELOC Basics: Making the Most of Your Home’s Equity
If you’re a homeowner, you might already know that you’re building equity in your home over time. What you may not know is you can use the equity in your home to finance other things. That’s where a Home Equity Line of Credit (HELOC) can come in handy.
What is equity?
To put it simply, equity is the part of your home that you own — the difference between what you owe on your mortgage and what your home is currently worth. As you pay off your mortgage, you gain more equity in your home.
What is a HELOC?
A HELOC is a line of credit secured by your home. Think of a HELOC as a revolving source of funds available to you, and you can access the funds however you’d like — with a Grow Visa® credit card, checks, transfers to another Grow account or cash withdrawals.* HELOCs have the advantage of flexible repayment options (interest-only or interest and principal) and competitive interest rates.
How can you use a HELOC?
The primary benefit of a HELOC is flexibility. Your lender won’t micromanage how you spend the money, so you can do what you like with the funds. A HELOC can be especially helpful if you plan to make various improvements to your home over time, since you can use funds as needed. A HELOC can also be used for other purposes, such as paying for college tuition or paying down other debt.
Two popular ways to use a HELOC are:
- Home improvements. This is the most common reason homeowners get a HELOC. Dreaming of a new kitchen or new floors? A HELOC can make it happen.* Plus, home improvements may add value to your home.
- Debt repayments. Again, low interest is the advantage here. But if you’re still running up credit cards after you’ve paid off the balances, home equity isn’t the solution. You may want to look at a balance transfer to a Grow Visa credit card and stick to a debt repayment plan.
Wondering if there are any downsides to a HELOC? Real estate is historically a safe investment, as home values generally rise over time, but there is no guarantee that home values will always trend upward. Remember, you’re borrowing against the value of where you live, so borrow wisely. Use HELOCs strategically and have a game plan for repaying the loan.
Ready to put your equity to work?
Our team of professional Real Estate Loan Officers is here to help. Call 800.839.6328, ext. 2694, or send us a message and we’ll reach out to you soon!
*Subject to credit approval. Not all will qualify.
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