How to Unlock the Equity in Your Home
Good news, homeowners: now may be a great time to unlock your home equity
With the values of homes surging, U.S. homeowners have record amounts of equity available to them.
Considering a home equity line of credit?
It’s important to assess how you’re planning to spend the cash before you unlock your home equity. There are smart ways to spend your equity, such as using the money to make home improvements that will raise the value of your home, or paying off high-interest debt, like credit cards.
A home equity line of credit, or “HELOC,” is exactly like it sounds: it’s a line of credit that allows you to borrow money against your home. Typically, you can borrow up to 85 percent of the value of your home. One advantage of a HELOC is that you pay interest only on the money that you use. That’s a nice feature if you’re not going to use the money all at once, such as if you’re planning to make a few home improvements that may take several months to complete. You’ll pay some money up front, then a little more along the way until the project is complete. In this scenario, you’re not paying interest on the entire amount at the onset of the project. Depending on how you structure payments and purchases, it could be a substantial savings.
An added benefit, if you’re using a HELOC to pay for improvements to your home, the interest you pay is generally tax-deductible.
Getting the best value on your HELOC
Ensure you’re getting the best terms possible for your specific situation when you decide to move forward with a HELOC. Shop around to get quotes from at least 3-5 lenders. Fees, terms, and rates can vary from lender to lender, so it’s important to do a side-by-side comparison. Shopping around to get your best deal on a Home Equity Line of Credit with LendingTree is the preferred approach. You complete a quick assessment of your home, and they’ll match you with up to 5 lenders to compare all at once.
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