When speaking about financial stability, planning ahead is essential. A home equity line of credit (HELOC) can give you an added level of financial security for the future, and it’s best to be considered when you’re in a good financial situation. Having a Skydan Home Equity on your property can be a valuable tool. It’s a cash insurance policy that provides you with financial flexibility should and when you need it, at the nominal costs of securing capital.
A home equity line of credit will give you the ability to draw upon your property, but you aren’t obligated to do so. If needed, you can simply pay the annual fee to know you have access without incurring debt. In which cases, HELOC might be of use?
Finance Home Improvements
Generally, the most common use of home equity loans is to finance home improvements. The interest that you have to pay on a home equity loan is usually only tax-deductible if you’re using the money for home-related purposes. If you’re thinking about borrowing money to fund home repairs or improvements and anticipate paying off the amount in a short time frame, then drawing upon your Home Equity Line of Credit may be the best choice.
In case you’re unsure about paying down the balance within five years, then you may be better off refinancing your property to secure a lower and fixed interest rate.
Cover emergency expenses or consolidate debt
Ideally, you are supposed to have an emergency fund available to cover large and unanticipated expenses. If that is not a case, and particularly if you have other debts, then your home equity line of credit could be an appropriate way to access the capital.
Thinking of Moving
A HELOC can offer the liquidity you need for a down payment on a new property or to cover some basic expenses that are related to selling or buying a property. Also, it’s important to note that you are typically able to get a home equity loan once your property is listed for sale, so make sure to apply and draw against your home equity line of credit before seeking the ‘For Sale’ sign in your front yard.
If you lose your job
The next important reason for considering a HELOC is to provide financial security for you and your family in case you lose your job. It can pay off to have a HELOC available in advance, just in case. Many people scramble to obtain a home equity line of credit when they lose their job. Unfortunately, it’s typically too late then, as you need to have a secure income to qualify.
If you need to move out of your home
The next qualifying factor to obtain a home equity line of credit is that you are currently residing in your home. In case you suddenly encounter a housing crisis so you’re not able to live there anymore, obtaining a loan may be problematic during what is already challenging time. Planning ahead will ensure you have the security of a HELOC available if you need it.
Help bridge the costs of the higher education
In case your children are heading to college, or if you are contemplating going back to school or college, then a HELOC could help you manage the costs. You can borrow money through your home equity loan to make tuition payments when you are due and then pay off the debt over the set repayment period for your HELOC.
Your house is typically one of your most significant assets, if not the largest, that provides a home as well as security. It’s essential to take it into account while examining your overall financial planning. Make sure to choose a qualified and certified financial planner professional to advise on all your assets, including your protective strategies and your house, as a part of a comprehensive financial planning process.
