Home equity loans are best used for those situations in which you are increasing your equity — via income or asset improvement — so that you always know you can pay off the loan should you need to.
Following are two good reasons for seeking a home equity loan.
1. Home Improvement Projects
Making improvements to your home doesn’t come cheap, and it is a common reason many people seek out home equity loans. Whether you need to upgrade your kitchen, replace your old windows or put in a deck, the benefit of using a home equity loan for repair work is that you are increasing the value of your property. This means that if you decide to sell, you’ll be able to pay off any mortgages and your home equity loan. In fact, choosing a home equity loan to make necessary improvements in order to sell a house not only increases your home’s market value, it can also be the quickest way to guarantee repayment of your loan once the house sells.
A word of warning is to be careful about how you use these loans for home improvement projects; you always want to be making changes that increase your home’s market value. Studies have shown that necessary repairs such as roof, window or vinyl siding replacement, or minor cosmetic updates to a bathroom or kitchen can all provide a high return on your investment. However, if your goal is to turn your basement into a working replica of the bat cave, chances are you won’t recoup enough costs to ever pay off that loan should you sell the house.
2. College Tuition
For the 2015-2016 school year, the average cost of tuition at a 4-year private college was $43,921, so taking out a home equity loan to pay for tuition can be an investment in your own or your children’s future. Scholarships are great, but often hard to come by, and qualifying for financial aid isn’t always cut-and-dry. In these cases, a home equity loan is a good option for covering the high cost of a college education.
If you’re planning a home improvement project or looking to offset tuition costs, access the equity in your home with a home equity loan. Flexible usage and agreeable terms mean you can do the things you’ve always dreamed of. Get the process started and apply for a loan today.