Your home’s equity is a valuable financial resource, especially if you’re looking to fund a home renovation, pay down high-interest debt, or achieve another goal. Depending on your needs, a HELOC may be a way to reach those goals.

What is a HELOC?

A HELOC is a loan that allows you to borrow from your home equity using your house as collateral. You then pay that loan back in addition to your regular mortgage payment. The application process mirrors that for getting a primary mortgage, which means:

• You have to apply and be approved for the loan.
• Lenders will consider your financial situation (like credit score, income, and overall debt load).
• You may have to pay for appraisal fees, credit checks, and closing costs.
  

Why should I consider a HELOC?

If you have debt with high APRs (like credit cards), a significant portion of your payments may go toward interest, not principal. That means it can take years to pay off that debt. HELOCs generally have significantly lower rates than typical credit cards, which means you can pay off that debt faster.

And since certain home renovations can add substantial value to your home’s resale price, a HELOC may be a great option for getting your home ready to go on the market, even if you don’t have a specific selling timeline in mind.

Are there limits to how I can use the money from this loan?

No! You can use it for anything you want, including financing education for yourself or a family member, paying for home improvements, or any other need.

Is there any risk involved?

Because the loan is secured by your home, defaulting on a HELOC could result in foreclosure, and if you sell your house before the loan is paid off, the amount you owe will have to be paid. That’s why it’s important to talk with a qualified home loan professional to understand if this is right for you.