With today’s economic climateAnd Designed to address this, many homeowners and potential buyers are out of luck. Interest rates are significantly higher than they were just a few years ago, thus reducing refinancing opportunities and driving many total buyers out of the market. Fortunately, current owners have a resource they can use to improve their home in the interim – and increase its value.
By tapping into their existing onesOwners can renovate and renovate their homes , and they can do so at lower interest rates than what’s typically available with other options like credit cards and personal loans. Two more prominent ways to tap into this existing equity are through And . While both have advantages and disadvantages, there are some compelling arguments that a HELOC may be your best choice.
Start exploring your HELOC options here now to see what rates you qualify for
Why a HELOC can be the best way to access your home equity
While a home equity loan can help you reach your goals, a HELOC may be the best option for your personal situation. Here are three reasons why.
You only pay for what you use
With a home equity loan, you have to pay back the entire amount you borrow with interest. But this is not the case with a HELOC.As a revolving line of credit, a credit card does. So you pay back what you borrow. This can save you a significant amount of interest over time, especially if you eventually realize that you don’t need as much of the funds as you initially anticipated.
Check out your HELOC options here now to learn more
Interest rates are low
Not only will you pay less interest with a HELOC (because of the monthly payments), butIf you take out a home equity loan instead, your payoff will likely be lower. While rates on both types of home loans tend to be comparable, HELOCs have variables, which are often slightly lower than what you can get with a home equity loan. Just note the keyword there — “variable” — which means rates can potentially increase in the future, unlike a home equity loan that’s locked in.
You have more flexibility
As mentioned above, a home equity loan is locked in with an interest rate — but it’s tied to a single figure. It can be beneficial if you know what you need and exactly what it will cost you. But if you don’t and want some flexibility in terms of how much you can borrow and when you can receive the funds, a HELOC is a good option. If you think you need $20,000 for a kitchen renovation, for example, but only really need $15,000, you’ll be better served by going the HELOC route. If you take out a home equity loan instead, you’ll be stuck paying interest on the entire $20,000 versus the $15,000 you’ll end up using.
Explore your HELOC options here now to see if it makes sense for you
Both home equity loans and HELOCs offer homeowners a cost-effective and smart way to renovate and improve their homes using money already deposited into their property. While both have unique benefits, for some homeowners a HELOC may be the best way to access their equity. With more flexible terms, lower interest rates and interest only on what you use (not the full amount you’re allowed to borrow), a HELOC can be an option when you rate the wider rate environment. Learn more about HELOCs, home equity loans and other ways to access your home equity right here.