When you make payments on a mortgage, you are paying off principal and interest on your loan with one payment. If you have been steadily making payments for quite some time now, then you will have built up some equity. Using your home equity as a line of credit means that you can borrow against the equity in your home that you have built. This enables many people to utilize the equity in their home for other purposes. If you are considering a home equity line of credit, here are a few smart options that can make the most of your money:
- Add space to a small home. If your home is smaller, sometimes using a home equity line of credit to enlarge your home with an addition is a better option than moving. Especially if you love your area and your home, an addition can be a smart way to spend your money.
- Choose efficient features for your home. When you use a home equity line of credit to add efficiency to your home, you can spend less on utilities over time. Not only will this help you save money every month, but efficient homes are also more comfortable, and these changes can be done while you occupy the home.
- Renovate outdated spaces in your home. If you are looking to sell anytime down the road, making smart changes to your home using a home equity line of credit is a great option. Big-ticket items like kitchens and bathrooms can be renovated with a home equity line of credit and, in turn, increase a future asking price.
- Shift money towards paying off debt with a higher interest rate. Getting a home equity line of credit does not mean you need to spend your money on your home. If you have a plan to pay off debt, then using your home equity line of credit can help you get there while spending less on interest. High-interest loans can be tough to handle, and paying them off and working towards a loan with a lower interest rate ensures more money going towards the principal debt.
If you have questions about home equity lines of credit, we at the BRM Lending Team would like to talk with you. For more information, please contact us today.