Time to Upgrade: Using a HELOC for Home Improvement
A home equity line of credit (HELOC) is a great way to finance your home improvement projects. If you have equity built up in your home, consider tapping it with a home equity line of credit for home improvement.
Do you need a home equity?
How do you know if you have equity? Just take the current market value of your home minus what you still owe on your mortgage. The difference is your equity. If it’s a positive number, you could qualify for a home equity line of credit based on your credit score. But if you owe more than your home is worth, you don’t have any equity. Instead, you’re underwater and a home equity line of credit is not a loan option for you.
A HELOC is a revolving loan funded by your equity. You don't have to pay interest until you use the money for your home upgrade project. The equity line is usually good for a long period of time, generally a maximum of 10 years and is sometimes renewable.
Adding value to a home by leveraging its equity for improvements can make financial sense over the long haul — if you choose it wisely. Replacing old cast-iron plumbing, bolstering a worn deck, repairing a cracked foundation — all of these can require major outlays and also protect your home investment. Remodeling projects such as a new kitchen or ensuite bathroom, for example, can also be a good use of a HELOC. Adding value to a home by leveraging its equity for improvements can make financial sense over time when you choose your home upgrades prudently.
If you already have a good first mortgage, a home equity line of credit can be a good option. With these loans, you draw out money as you need it and pay it back at your own speed, as long as you make at least minimum monthly payments. When you need home updates, a home equity line of credit can provide an excellent ready source of funds.
However, there are risks. If you don't make your monthly payments, and default on this loan, you could lose your home. Your first step is to visit ChoiceOne Bank to discuss your options using a home equity line of credit. Working with a lender you know and trust, and who knows you, is a good way to begin.
Working with ChoiceOne
ChoiceOne loan professionals will explain how a HELOC can be used for anything you want. It's well-suited for long-term, ongoing expenses like home updates, home upgrades, and home improvements. ChoiceOne will walk you through the process with current rates, maximum amount you can borrow and the terms of the loan. A HELOC usually has a variable interest rate based on the fluctuations of an index, such as the prime rate.
Is it time to upgrade?
Call us today to learn more about your options at 888.775.6687. You can also apply online.
*Loans are subject to credit review and approval. Home Equity Lines of Credit are available for well qualified applicants for loans of $5,000 or greater. No annual fee for first year, then $50 per year. Processing fee of $199 may be applicable. Rate not to exceed 18.00%. Consult a tax advisor regarding the deductibility of interest.