Imagine this: You finally make the exciting leap to start house hunting. You meet up with your realtor, see a few houses in the perfect location… and then you quickly realize there’s an inventory shortage; houses are priced far higher than you imagined and people are getting into bidding wars on houses in your dream neighborhood.
Let’s be honest, house hunting in today’s market can be stressful.
Have you considered staying where you are and renovating your current house to get your dream kitchen or add a much-needed home office?
A home equity loan or line of credit can help you make these improvements and add value to your current home, but it can be a confusing topic and often leads to a lot of questions.
Luckily, Lake Michigan Credit Union is here to help!
Many of our members might be considering a home equity line of credit to remodel the kitchen or finish that spare bedroom in the basement, so let’s start there.
What is a home equity line of credit?
A home equity line of credit (sometimes referred to as a HELOC), is set up as a revolving line of credit with a maximum draw amount that is secured by your home.
You may have heard of a home equity loan, but are not as familiar with a home equity line of credit. What is the difference?
A HELOC is a revolving line of credit, meaning you have a set credit limit and as you pay the loan down, those funds become available again. HELOC’s function very similar to a credit card. A Home Equity Loan, by comparison, is a closed-end loan that has a fixed term, fixed payment amount, and loan funds are disbursed at time of loan and are not accessible as the loan is repaid. We offer both options at LMCU – and we would be happy to find the best product for our members’ needs.
Besides home remodeling, are there any other uses for a HELOC?
Absolutely, HELOC’s can be used for a variety of reasons. While the most common reason is for home remodeling projects or additions, it can also be used for college tuition, debt consolidation, the purchase of second or vacation home, weddings, or even kept as an emergency fund for peace of mind. There are other potential uses as well, such as major medical expenses, vehicle repairs, or even major purchases that you don’t want to put on your credit card.
How can a I decide if a HELOC is the right choice for the project?
A HELOC is a great product if you’re looking to do multiple projects or would just like to have some emergency funds on hand. HELOC’s also have flexible payment options and typically offer the lowest payment of any home equity product. We recommend members reach out to us if they have any questions about using their home’s equity and we can help them figure out the best product for the project.
Is it easy to apply for a HELOC? Where is the best place to start?
Whether you want to remodel a kitchen or bathroom, consolidate debt, or pay for unexpected expenses, you can make it happen with a home equity loan, or home equity line of credit.
Check out our Home Equity page to learn about the differences between a home equity loan and line of credit, and to see how much you might qualify for.