A home equity line of credit is a fantastic vehicle to tap into your home’s equity. With the run-up in property values over the past few years, American homeowners are awash in equity. A home equity line of credit allows you to tap your built-up equity.
The funds from a home equity line of credit can be used for home improvements, debt consolidation, general savings or to purchase another home among other things. Many people put off major home improvements during covid. Now they are looking to make improvements and upgrades to their home. The line of credit provides a cost-effective way for these home repairs and upgrades.
Another great use for a line of credit is for debt consolidation. Interest rates on credit cards and personal loans have skyrocketed in the past couple of years. Total consumer debt hits record numbers month after month. A home equity loan can help a client consolidate their consumer debt into one lower monthly payment.
The reduced monthly payment can help a client pay down their overall debt much more quickly. A lower total monthly payment can also help to build savings, pay for a large purchase or save for college. Some clients will also use their monthly savings from the debt consolidation to pay down the principal balance on their private home mortgage. Anytime, you can pay down debt more quickly – it is a short-term and long-term win.
In some cased, the interest paid on a home equity line of credit may be tax deductible. The tax deduction may vary from state to state and would always need to check with a tax accountant for confirmation.