Home Equity Line of Credit: Is it Right for You?
Many families today could use a little extra money for major projects around the house, starting a small business, or even catching up on bills that accumulated due to loss of employment or other income. If you own your home and need securing funds for ongoing costs or a major expense, a HELOC might be right for you.
What is a HELOC?
A home equity line of credit (HELOC) is a revolving credit account that gives you access to funds that you can use at your discretion.
It works almost like a credit card, where you have a specified limit for how much money you can borrow. But you can continue to take out more money as you pay down your balance below the limit.
Unlike a credit card, however, this debt is secured by the equity in your home. Failure to make payments on time could potentially put your home at risk. So it is important to fully understand the risks and the terms of your agreement before borrowing the money.
What Is a HELOC Used For?
There are many possible uses for funds from secured lines of credit, but some of the most common ones include:
Paying off extensive home repairs
Remodeling the bathroom or kitchen
Adding on an extra room
Paying for college tuition
Consolidating high-interest debts
If you decide to use these funds to remodel your home, you might be able to claim some tax deductions on the mortgage interest. But be sure to consult a tax professional before opening this account to see if you qualify, as there are some restrictions and circumstances that could disqualify you for deductions.
Also, in rare cases, some lenders may put restrictions on how the money disbursed from a HELOC account can be used. Limitations on how you can use the money, if any, would be explained in the terms of the contract.
If you are a homeowner with 10-20% home equity or more and need funds for home remodeling projects, putting in a swimming pool, debt consolidation, or any of the other uses mentioned above, contact Summit Commercial Capital to explore possible financing options.