{"id":1555,"date":"2021-07-26T17:29:43","date_gmt":"2021-07-26T21:29:43","guid":{"rendered":"https:\/\/www.skypointfcu.com\/wph\/workarea\/?p=1555"},"modified":"2021-07-26T17:29:45","modified_gmt":"2021-07-26T21:29:45","slug":"whats-a-good-use-for-a-heloc","status":"publish","type":"post","link":"https:\/\/www.skypointfcu.com\/wph\/workarea\/blog\/whats-a-good-use-for-a-heloc\/","title":{"rendered":"What\u2019s a Good Use for a HELOC?"},"content":{"rendered":"\n<p>When you take out a second mortgage, a name for a <a href=\"https:\/\/www.nerdwallet.com\/blog\/finance\/mortgage\/mortgage-abcs\/home-equity-line-of-credit\/\">home equity line of credit<\/a>, you\u2019re offering your house as collateral to secure another loan. The upside: You can gain access to up to 85% of your home\u2019s value, minus your current mortgage balance and adjusted based on your creditworthiness.<\/p>\n\n\n\n<p>The downside? If you can\u2019t make your payments, you could lose where you live.<\/p>\n\n\n\n<p>Because the stakes are high, you want to make sure you use a HELOC for the right reasons. Here are a few.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Making home improvements<\/h3>\n\n\n\n<p>Most people who take out a HELOC do so to make home improvements. Experts say you should only do this if the improvements you\u2019re considering will increase your home\u2019s value. This way, the money you\u2019re borrowing will be returned when you sell your house at a higher price.<\/p>\n\n\n\n<p>The National Association of Realtors\u2019 2015 Remodeling Impact Report lists these six changes as the ones with the best return on investment:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Installing a new front door.<\/li><li>Installing new siding.<\/li><li>Upgrading your kitchen.<\/li><li>Adding on to your deck and patio.<\/li><li>Making an attic into a bedroom.<\/li><li>Installing a new garage door.<\/li><\/ul>\n\n\n\n<p>These improvements can range from a few hundred to tens of thousands of dollars, but they don\u2019t change the footprint of your home and tend to be what future buyers look for.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Supplementing an emergency fund<\/h3>\n\n\n\n<p>Everyone should have an emergency fund to cover events such as unexpected car repairs and appliance breakdowns. Most people keep these in <a href=\"https:\/\/www.nerdwallet.com\/rates\/savings-account\/?trk=nw_gn_2.0\">savings accounts<\/a>, but you might consider a home equity line of credit as another source of cash. You only pay interest on the amount you borrow, and you could pay the loan off quickly to save money. Still, it makes more sense to have an emergency fund that\u2019s earning a little interest rather than one that charges you interest.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Paying off high-interest debt<\/h3>\n\n\n\n<p>Because the average interest rate on a HELOC is much lower than the average credit card interest rate, many people think about using a HELOC to pay off their credit cards. This is a great strategy if you\u2019re committed to never carrying a balance again. Otherwise, you\u2019re just adding another debt at a lower rate.<\/p>\n\n\n\n<p>Regardless of how you use a HELOC, remember that the interest rate is variable and may change each time you tap it. And you\u2019ll have to repay the entire loan by the end of the payment period set by the lender. On the upside, the interest you pay on a HELOC is tax deductible, like your mortgage interest. If you use a HELOC for the right reason, that\u2019s just one more benefit.<\/p>\n\n\n\n<p>\u00a9 Copyright 2016 <a href=\"http:\/\/www.nerdwallet.com\/\">NerdWallet<\/a>, Inc. All Rights Reserved<\/p>\n","protected":false},"excerpt":{"rendered":"When you take out a second mortgage, a name for a home equity line of credit, you\u2019re offering your house as collateral to secure another loan. The upside: You can gain access to up to 85% of your home\u2019s value, minus your current mortgage balance and adjusted based on your creditworthiness. The downside? If you [&hellip;]","protected":false},"author":5,"featured_media":1556,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","attr_excerpt":["When you take out a second mortgage, a name for a home equity line of credit, you\u2019re offering your house as collateral to secure another loan. The upside: You can gain access to up to 85% of your home\u2019s value, minus your current mortgage balance and adjusted based on your creditworthiness.\r\n\r\nThe downside? If you can\u2019t make your payments, you could lose where you live.\r\n\r\nBecause the stakes are high, you want to make sure you use a HELOC for the right reasons. Here are a few."],"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1555","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What\u2019s a Good Use for a HELOC? - SkyPoint Federal Credit Union<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What\u2019s a Good Use for a HELOC? - SkyPoint Federal Credit Union\" \/>\n<meta property=\"og:description\" content=\"When you take out a second mortgage, a name for a home equity line of credit, you\u2019re offering your house as collateral to secure another loan. 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