When considering if and when to use a home equity loan, it's important to know the potential benefits that a home equity loan or home equity line of credit (HELOC) can offer. Here are three for you to consider:
Lower Interest Option
For some people, home equity can offer a lower interest rate than other types of loans. This can be helpful when considering education costs, large purchases, or managing debt. Check current interest rates.
Flexibility
There are two options when tapping into the equity that's been built up – a fixed-rate home equity loan or the line of credit (HELOC). And HELOCs are structured for extra flexibility. Instead of receiving a lump sum, there is an amount of cash available to the borrower to take when needed during the withdrawal period.
So, if an unexpected expense arises, you could take the amount to cover the expense and leave the rest. This gives you the flexibility to use the line of credit in a way that suits your specific needs.
Countless Potential Uses
Home equity loans can be used for any purpose. That means they can be a financial solution for people in many situations. It's always good to know you have options. If you want to know more, you can read about the top uses for home equity loans.