Home equity loans: They're not just for home improvements
February 13 2018
When people think of home equity loans, they often think of home updates and renovations. But these loans can be used for so much more than simply covering the costs of kitchen upgrades, floor replacements, home additions and other types of improvements. Home equity loans can also be used for consolidating debt, purchasing a car, starting a business and various other expenses.
Benefits and Types of Home Equity Loans
These loans are relatively easy to qualify for, and they often come with a lower interest rate compared to first mortgages since the home is used as collateral. This loan option allows the borrower to get a lump-sum amount to spend, which can be paid back in fixed installments. They're especially useful in urgent situations such as emergency home or car repairs.
Alternatively, a borrower can apply for a home equity line of credit (HELOC) and once approved, borrow as much as they need multiple times up to the maximum amount available. It's a flexible option that typically has variable interest rates. Borrowers are usually able to make small payments during the initial "draw period," after which they'll need to start making regular amortized payments.
How Home Equity Loans Can Be Used
Home equity loans can help homeowners consolidate credit card and student loan debt, cover college tuition costs, pay for home renovations, launch a new business or achieve other types of financial goals. It's really up to the homeowner how they decide to use the loan.
To learn more about home equity loans, get in touch with us today. We're here to answer any questions you may have about this unique loan option.