Is a HELOC right for you?
A Home Equity Line of Credit (or HELOC) has become a popular alternative to borrowing money. The interest rates are based on prime rate, generally substantially lower than the rates you experience with credit cards or lines of credit. With interest rates sitting at an all time low, many people are considering HELOCs. Here are a few tips:
1. Make a plan.Easy money can promote spending beyond your needs. Make sure that you establish exactly what your HELOC will be used for. In most cases they are used to consolidate higher interest debts such as credit cards. It is important to stay financially disciplined. If there are some big ticket expenses coming your way such as college, or an unexpected and costly medical expense —a HELOC may be a great idea. Since the loan is backed by collateral, the rates are lower than they’d otherwise be. [A HELOC shouldn't be used for day-to-day expenses.]
2. Be realistic.It is advised that you only take out an amount that you will be able to pay off in two to five years, especially if you are thinking about moving anytime in the near future.
3. Improve your future. Typically, using equity to improve the value of your home is always a good move - especially if you decide to sell it soon afterward, and can use the increased selling price to pay off your loan.Note: Rates, terms, and fees that make up the deal you’re offered will vary by lender, so let us do so shopping around together to make sure you get the best deal possible.
I’m always happy to answer any questions you might have & if any of your friends or family members have general inquiries about qualifying for a mortgage, feel free to send them my way!