Owning a home is a big deal, and there are a lot of questions that we need to make sense of here. And, as we start to look at everything that may be involved in this process, it’s likely that we need to work out a lot of details. Let’s take a deeper dive into these loans and how they can be used.
What Are They?
First, you want to know the difference between home equity loan and heloc (home equity line of credit). To determine equity, you take the amount of value your home has and subtract the amount you still owe on the mortgage for your home. You get a loan upfront a line of credit, on the other hand, has a maximum, but you don’t get it all upfront.
What Can You Use Them For?
Home equity can be used for almost anything that you can imagine, but more often than not, you’re using it on something that your home needs. Home repairs, additions, and replacements are the most common reasons that people are using home equity.
Are They Worthwhile?
Absolutely. More often than not, home equity loans and lines of credit have some of the lowest levels of interest that you can find in a loan, because of the collateral of your home’s equity. Not only that, but you can choose between a fixed rate and a variable rate (depending on your bank), so you can sort out payments and know what they are going to be most of the time.
As you may expect, there are a lot of questions that come up here, and you want to be sure that you can talk with a financial advisor about what it is that you can do in these cases.