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In need of extra cash? Check out how you can use your home equity


Your home can be your savior in a financially distressed situation. If you have built enough equity on your home, you can take out a loan against it to pay off debts or meet other necessities. But, there are times when borrowing against home equity can put you in an economical disaster.

Are you planning to take out a home equity loan or use home equity line of credit (HELOC)?

Check out the reasons to consider while tapping your home equity:

1. Consolidating your debts

If you are thinking of consolidating your debts, go for a home equity loan; because, the interest rate on a home equity loan is lower than any other personal loans. It is also possible because the interest that you pay on a home equity loan is tax deductible.

2. Home repairs

Do you need to make home improvements? Use a home equity line of credit to finance the work. Or, take out a home equity loan if you know how much money you need to remodel your house.

The equity loan is a good option to consider when you’re making home repairs before selling the house. It is because you can pay off the loan with the money after selling your house.

3. College costs

Want to help your child with college costs? Take a look at your home’s equity. It’s a good option as you know how much you need. Moreover, the interest rate may be lower than any typical student loan.

4. Start a business

When you are falling short of cash to start your business, a home equity line of credit may be your savior. But, before funding your business check out if you can pay off the loan in case your business fails.

5. Medical expenses

It can be another reason to take out cash from your home’s equity. You can use a HELOC if you’re not sure about your medical expenses.

6. Home loan refinancing

What’s better than using your home equity to refinance your mortgage? Moreover, it has lower interest rates and monthly payments as compared to other types of conventional mortgages.

7. Purchase a new car

Take out a home equity loan to finance your new car if you’re finding it hard to get an auto loan from your bank. Moreover, your home will not be in danger if you fail to repay the loan.

8. Make credit card payments

Most people take out a home equity loan or use a HELOC to pay off credit card interest and or repay credit card debt. However, your home is at risk if you fail to keep up with the equity payments.

9. Protect retirement

Most retirees use their home equity to fund their retirement. But, make sure to pay it off when you get the next paycheck. Or else, your home will be in danger.

10. To meet emergency expenses

Emergencies are uncertain. Whenever you meet with an emergency and you have the option to borrow money from your home equity, go for it. You can take out a home equity loan or use a HELOC to fund your emergency expenses. But, make it a point to repay it.

Though you have ample options to choose from, make sure to pick the right way to take full advantage of your home equity.

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