People are very protective about the equity in their home, and rightfully so, because they spent many years paying down their mortgage to build up your equity. So it makes sense to feel obligated to protect it because it’s a strong part of your financial well-being.
Yet, there are definitely specific reasons for needing a home-equity line of credit. And even if you’d rather not spend the equity in your home, sometimes outstanding circumstances prevent this from being possible.
With that said, we will take a quick look at three reasons why you absolutely should take out a home equity line of credit. Because life has a way of surprising us at every turn, and you never know when you’re going to need more cash flow at your immediate disposal.
1. Use Equity in Your Property for Home Renovations
If you’re property rich and cash poor, and the need for a major renovation – i.e. a new roof, a new septic tank, a new boiler, etc. – suddenly springs up out of nowhere, it’s time to consider taking out a home-equity line of credit.
Your quality of life will suffer if you do not immediately make these renovations. Plus, in some instances your property could actually suffer even further than it already has. So you have to come up with the money somehow, and using the equity in your home is certainly an easy way to get your hands on fast cash in a pinch.
2. Use Equity in Your Home for Other Investment Opportunities
Are you dying to get into other investment opportunities but do not have the available capital to make it happen? Consider taking out a home equity line of credit so that you have cash flow available when these investments arise.
Sure, real estate is an amazing opportunity and your home is certainly a good investment. But what if you want to buy other property to flip or rent? Or what if you have a chance to get in on the ground floor of a major IPO?
Instead of missing these opportunities, a home-equity line of credit will make it possible to have cash on hand to use when it’s needed the most.
And the great benefit of a home-equity line of credit is that you do not have to touch it until you’re ready to spend the money. Plus, you only have to take what you need and nothing more. Whereas a traditional loan requires you to take the whole amount whether you need it or not.
According to Home equity line of. credit, a website discussing what are the rates for home equity line of credit, “Building up home equity is one of the key advantages that homeowners have over renters.”
3. Use Equity in Your Home to Pay off Outstanding Credit Card Debt
If you are struggling to pay high interest credit card debt, and yet you have plenty of equity in your home, you are missing out on a huge opportunity.
Stop throwing your money down the toilet by paying humongous interest rates to the credit card companies. Instead, take out a home-equity line of credit and use some of the money to pay off your high interest credit card debt.
By going this route, you’ll be able to eliminate your high monthly payments and get rid of the high interest altogether. Because the odds are that your home-equity line of credit has a much lower interest rate than your unsecured credit card debt.
So do yourself a big favor and take advantage of this opportunity now.
Taking out a home-equity line of credit isn’t bad if you do it for the right reasons. Consider it as a viable option if it makes sense for your personal situation.