A home equity line of credit can open many doors for homeowners if used correctly but if not used the right way it can be your worst nightmare. We want to give you all the information you need to maximize your home’s value and make the headache hurt a little less!
What is a home equity line of credit?
HOME EQUITY LINE
A home equity line of credit is credit that a homeowner can have using their own home or property as support. What I mean by this is that the home equity line of credit allows a homeowner to borrow against the value of their own home. The home becomes the collateral for the loan.
What is the smartest way to use the Home Equity Line of Credit?
From a professional standpoint, remodeling is often a popular way that people choose to use their HELOC (home equity line of credit). In doing this, homeowners are given the opportunity to use the value of their home to improve their property value as a whole. When focusing your Home Equity Line of Credit towards a remodel you will discover that the interest is actually tax deductible. Another bonus for homeowners. The main goal that all homeowners should have the ability to improve or maximize their home’s value. Just in case that day comes that you want to sell. A home with a high property value will not only benefit just the homeowner but also the lender.
The Pros of Using Home Equity Line of Credit in Remodeling:
- Usually, there is a fixed rate of interest with this type of loan. If not fixed then it will fluctuate around the same amount each month!
- The money from the loan is usually given upfront which makes larger projects attainable.
- The payments are very structured which make it easier to pay the bills correctly and on time. Payments also begin right away.
- If not interested in renovating immediately then one can put away money in an interest bearing account. So money for a future remodel can be earning interest until homeowners are ready.
The Cons of Using Home Equity Line of Credit in Remodeling:
- There are fees that come along with this type of credit because it serves as a “second mortgage.” Best thing to do before is check with a lender about all fees associated with the loan!
- If the property loses significant value or there is another crisis like 2008, homeowners may owe more money on a loan than what their property was worth.
- There is a large risk with this type of loan because the collateral is a person’s home. If someone finds themselves not being able to make payments then this can lead to their home being taken away.
- If the remodel project is long, one may spend their money on other items not related to remodeling or increasing the homes value.
WONDERING HOW MUCH REMODELING COSTS?
THE FOLLOWING ARE OUR REMODELING SERVICE AREAS
Rocky Ripple, Indy, Indiana Meridian Kessler, Indy, Indiana
Castleton, Indy, Indiana
Meridian Hills, Indy, Indiana