What Could You Do With a Home Equity Loan?
10 Jun 2020
Home equity loans are sometimes referred to as second mortgages. With this type of lending option, you use the equity in your home as the security for the financing. Lenders who offer home equity loan will usually approve loan amounts that equal a percentage of the total equity in the home. Once you have the money in hand, there are all sorts of ways to put it to good use. Here are four examples of how you can use the funds to better your financial position.
One of the most practical ways to eliminate debt is to make it more manageable and lower the average interest you pay while retiring the balances. You can accomplish this by taking out a home equity loan that will allow you to settle credit card and other debts in full right now.
In order to get the most from this arrangement, the interest rate on the loan should be less than the cumulative rate you’re paying on all of those other debts. You also want to free up a little capital each month by ensuring the loan payment is lower than the total amount you current disburse on those other debts.
With the right approach, you save money on interest and could retire the total debt sooner rather than later. While you will need to be cautious about running up other debt, this approach can also allow you to place a few more dollars into your savings each month.
Cover the Cost of Home Improvements
There are things you would like to do with the home. Use the loan proceeds to make those improvements happen. From replacing the roof to installing a new HVAC system to remodeling the kitchen, the equity in your home can provide the financing needed. Best of all, the interest rate on the loan is likely to be competitive with other forms of financing.
Buy a Second Car
You’ve been a two-car family for some time, but the second car has finally come to the end of the journey. It’s true that you could finance through a car lot, but would that really be the best way to go? You could find that getting the money via a home equity loan would allow you to make the purchase and repay the debt at a lower rate of interest. The installment payments may also fit into your monthly budget with greater ease.
Settle Unexpected Medical Bills
Even with excellent insurance, there could be some procedures or treatments that are not covered. Since they are necessary, how will you cover the cost? One approach is to use the equity in your home to secure a loan and pay off all of that pending medical debt. The rate on the loan is likely to be superior to the finance charges and fees that apply on those balances that roll over from month to month.
These are only some of the ways that you can make the equity in your home work for you. Is there something that you would like to accomplish or would restructuring your debt provide some benefits? If so, now is the time to talk with one of the Mortgage Central Nationwide brokers and see what can be done. In less time than you thought possible, the money could be in hand to handle the expense of just about any type of project.