Top 8 Reasons for a Home Equity Line of Credit

Many borrowers use a HELOC.com line for debt consolidation because it can help reduce their monthly payments. With this line of credit you can keep your existing low-interest mortgage (if you have one) while accessing your home equity to pay down higher-rate debts.

Once you qualify for a HELOC.com line of credit, you can use the money to pay down as many of your existing debts as you'd like. This means you'll have one monthly bill to pay instead of many. Plus, if you've reduced your interest rate, your monthly payment and total monthly costs may both be lower than those on your old debt.

If your financial situation changes after consolidating your debt, the draw period on a HELOC.com line also gives you a built-in option to access equity again without starting over. As you repay principal, those funds become available to redraw during your draw period. You can do this redraw without another hard credit pull.

The rate on any additional draw will be fixed at the time of that draw, based on the Prime Rate plus a fixed margin, but your HELOC agreement specifies both a rate floor and a rate ceiling, so your future draw rate will always fall within a defined range with no big surprises.

Home improvements are one common use for a HELOC.com line of credit.

You can use the HELOC.com line of credit to pay for materials, contractor fees, permits, and other expenses, and you'll often pay a lower interest rate than on alternatives such as personal loans or credit cards designed for home improvement or financing offered by your contractor. And, because a HELOC.com line usually has a speedier approval process than a cash-out refinance loan, you can get your project underway faster.

You may also be able to deduct interest costs when you use your HELOC.com line to buy, build, or substantially improve your home (consult your tax professional).

It's always a good idea to have an emergency fund with three to six months of living expenses. However, not everyone has money saved for emergencies.

A HELOC.com line of credit can help you cover unexpected expenses. This type of loan is a more affordable way to pay surprise costs than a credit card is, and depending on the amount of equity you have, you may have access to a larger credit line than a credit card would offer.

Borrowers facing surprise costs may need funds quickly, so a HELOC.com line can be a better alternative than a cash-out refinance loan, which often has a longer qualification process.

College tuition, graduate school, trade certifications, and professional training programs can have high upfront costs. For homeowners with available equity, a HELOC.com line can provide a way to fund education expenses without refinancing a low-rate first mortgage.

Because the loan is secured by your home, the rate may be lower than what you would find on private student loans, personal loans, or credit cards. You receive the approved amount at closing, which can be useful when tuition deadlines or enrollment deposits fall on a fixed calendar.

If you return for additional coursework or follow-on training during your draw period, you can redraw available principal without submitting a new loan application and without triggering a new hard credit inquiry. The rate on any additional draw is fixed at the time of that draw, based on the Prime Rate plus a fixed margin specified in your HELOC agreement. Your agreement also defines a rate floor and a rate ceiling, so the rate on future draws will always fall within a bounded range.

Energy costs have been steadily rising, and homeowners who invest in efficiency upgrades can reduce long-term utility exposure. Fortunately, homeowners can invest in energy-efficient upgrades that help to keep their costs down and even increase home value. However, you have to fund these projects up front.

While some updates, such as adding insulation, can be relatively affordable, others, like installing solar power or switching to energy efficient windows, can cost thousands of dollars. Borrowing against your equity with a HELOC.com line could help you afford these projects so you can enjoy long-term savings.

A HELOC.com line of credit is a way to borrow in order to provide children or family members with meaningful financial help, especially if they're just getting started in life and aren't in a position to borrow on their own.

You could use your funds to lend or give a loved one money to pay for medical bills, cover daycare costs, buy a home of their own, or make other major improvements to their life.

Many parents choose to do this if they're financially comfortable and don't want to make their children wait for an inheritance when they have pressing needs in the present. A HELOC.com line is one option to offer financial assistance versus selling retirement account investments or selling a family home.

Of course, even if your family member agrees to repay you when you provide financial help, you remain responsible for the HELOC.com line regardless of whether they follow through on their promise or not. So be sure you can still repay what you're borrowing even if it turns out they can't pay you on schedule or at all.

While you will ideally pay for large purchases with cash, this isn't always practical. If you have something important to buy, like a car or boat, you can use your HELOC.com line to cover the cost.

Lower rates and higher borrowing limits can make the HELOC.com line a more attractive option for these purchases compared with personal loans or credit cards, while the speedier approval timeline makes this loan more suited for large purchases compared with a cash-out refinance loan.

Weddings can involve high upfront costs, including venue deposits, catering, travel, photography, and other vendor payments.

Because a HELOC.com line is guaranteed by your home, the rate may be lower than what you would find on many unsecured borrowing options, such as credit cards or some personal loans. You also receive the approved amount up front, which can be useful when wedding expenses come due on a fixed timeline.