With the prices of homes rising steadily, home equity lines of credit are becoming popular potential sources of extra cash for many homeowners. However, using a home equity line of credit to tap into your home’s value should be approached with caution. Our mission at the BRM Lending Team is to facilitate your financial goals, so we offer these guidelines for success if you intend to take out a home equity line of credit.
- Fully understand the loan terms and payments—Home equity lines of credit can have variable interest rates and flexibility in terms of repayment. We suggest paying back the loan with regularity, so you can reduce interest and eliminate the risk of your home being used as collateral for a second purchase.
- Put a limit on using your equity—It is tempting to use a home equity line of credit for everything from home repairs to paying a child’s tuition. But put a limit on how much you are willing to borrow from your home’s equity to remain confident and secure in your spending.
- Use your equity to diminish interest payments—Do you have any high-interest credit cards? A home equity line of credit can be a beneficial way to pay off these debts at the line of credit’s lower interest rate.
We can help you smartly approach using a home equity line of credit to achieve your financial goals. For additional information, reach out to us today.