Financial Solutions for First Responders: Top 3 Reasons to Consider a Home Equity Line of Credit
In this blog, we take an in-depth look to determine if a home equity line of credit is a sound financial solution. In addition, we will explore the top 3 reasons to consider a home equity line of credit.
What is a Home Equity Line of Credit?
One of the biggest advantages of being a homeowner is the ability to build equity. Home equity is the difference of what you owe on a mortgage and what your home is valued. There are a couple ways you can increase equity. First, you can increase equity by paying down the principal of your mortgage. Second, your equity will increase if the value of your home rises.
A home equity line of credit is commonly referred to as a HELOC. It allows the borrower to access the necessary funds as needed, and usually only requires low monthly payments depending on the terms and conditions. While there are many reasons to consider accessing your home equity, it is important to determine when a home equity line of credit is the right solution for you.
When is a Home Equity Line of Credit Right for You?
First, determine the pros and cons. Would a home equity line of credit add tangible value, or save money depending on the interest rate? Should you avoid using a home equity line of credit for routine purchases?
The following are 3 ways a home equity line of credit is designed to be a financial solution.
Home Improvements, Repairs and Remodels
Firstly, these are the most sought-after reasons why people choose a HELOC. Whether building an addition or the perfect outdoor oasis, home improvements can be costly but can also add a lot of value. Understanding the financial commitment between a home renovation vs home remodel is paramount in determining if a HELOC is the right solution.
Costs Related To Higher Education
Secondly, the cost of higher education increases each year and many parents often want to relieve the financial burden for their children. While there are long term options to save for higher education that span from birth to graduation, a HELOC can be a great short-term solution for those that were not in a financial position to begin saving for their children early on but have accumulated wealth over the recent years.
Consolidate Your Debt
Thirdly, consider a HELOC if you have accumulated a large amount of debt spread across multiple loans and creditors. If the interest rate for a HELOC is less than the interest rate of the outstanding debt it might be time to consolidate debt. A HELOC allows the option to consolidate debt, reduce the monthly payment amount, and make low monthly payments.
Talk to Us
Greater KC Public Safety Credit Union is the only full-service Credit Union in Missouri and Kansas solely dedicated to First Responders and their families since 1934. To learn more about our Home Equity Line of Credit, call or visit us online.