When Should You Apply for a Home Equity Credit Line?
Although you may use a credit line for home improvements, here are some other valid reasons to tap into your equity.
Many people think that a home equity credit line is to be used solely for the home itself, but this is only one option. There are a variety of reasons to apply. Everyone’s situation is unique, but here are a few of them:
When you want to make significant improvements to your home
A home equity credit line can help you make upgrades to your home. Apply if you want to remodel your kitchen or bathroom or add on to your home. Even though you are borrowing against your home's value, you're potentially increasing that value as a result of the improvements.
When you want to consolidate debt
If you have debt from multiple credit cards and loans and are struggling to pay it off, a home equity credit line can help. Borrow enough money to pay off all of your outstanding debt and consolidate it into one monthly payment, and you’ll probably get a better interest rate.
When you want to reduce interest rates on credit
Even if you're not necessarily struggling to pay off credit card debt, you may still be paying higher interest rates than you'd prefer, and a home equity credit line can help you pay off those cards and get a new payment plan with a lower rate.
When you need financial aid for school
School loans and tuition are major financial headache sources for many Americans. A reported 44 million borrowers in the country have $1.3 trillion in student loan debt.1 A home equity credit line can help alleviate the burden of costs that come with higher education.
When you need to make a large purchase
Whether it's a new HVAC unit, a wash/dryer, a refrigerator, or a new oven, large purchases are sometimes necessary. While not your only option for most of these items, a home equity credit line is a solid one for financing a substantial purchase.
When you need a vacation
Use a home equity credit line to finance a well-deserved vacation. A monthly payment with a low interest rate can be a more feasible option than running up credit card debt to pay for that special trip.
A home equity credit line offers the borrower a significant amount of financial freedom. It lets you borrow what you need and make low-interest payments, as opposed to taking out a loan and having to pay back the full amount that is available to you.
For more information on a home equity credit line from Nevada State Bank, visit nsbank.com/hecl.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A.