There are many reasons why, at some point in life, homeowners need to free up some funds. It could be to consolidate debt or carry out maintenance to the property but whatever the reason might be, a home equity loan is an option. It is possible to borrow against the value of your home using a home equity loan and below you will find 4 reasons why to consider home equity loans.
Firstly, and as highlighted above, you can use a home equity loan to improve your financial position by consolidating debt. If you have outstanding debts from credit cards or payday loan companies a home equity loan can free up enough cash to make a lump sum payment on your credit card or payday loan, either wiping it out completely or removing a significant chunk of the debt. Interest rates can sometimes be as high as 20% on credit cards and other types of loans, meaning it can be extremely difficult to stop them from building up. A home equity loan can solve that problem quickly and you can read more about home equity loans at Mortgageloan.
You may have been considering making improvements or repairs to your home and that is another great reason to take advantage of a home equity loan. There are many homeowners who have decided to use a home equity loan to fund repairs and improvements on their home, so this is nothing new. It does not matter whether you want to build an extension, add a conservatory, improve the garden, install a new roof, fix water damage, or repair a crumbling wall, all of this can be covered using a home equity loan.
Another reason why you may consider using a home equity loan is because it can be used to fund a college education. It is worth pointing out that not every home equity loan company will allow you to use the funds on a college education but some do and it is a great way to get someone through college without amassing a lot of student debt. With mortgage rates considerably lower than student loan interest rates, it makes sense to use a home equity loan to generate the finance required for college. For those who may be considering using a home equity loan to pay for a child’s education, it is worth working out if you can pay off the debt before retirement.
Finally, you may wish to take out a home equity loan to cover emergency expenses. For example, you may have a significant medical bill to pay and do not have the funds available to cover the cost. Perhaps you are out of work and need cash to pay the household bills until you find new work? Either way, in this instance a home equity loan should only be used as a temporary measure and you must have a plan in place to repay the money because if not, you face the threat of losing your home.