If money is tight, it may feel like you’ve run out of options for finding the cash you need to survive. However, if you own a home, you have the opportunity to acquire a home equity line of credit that could help you get over the hurdle you’re currently facing. While this may seem like the perfect fix, this can be a risky move that should really only be taken advantage of when it makes financial sense. To help you discover if getting a home equity line of credit is right for you, here are three situations in which to consider getting a HELOC.
You Need To Make Renovations
One of the best reasons to tap into the equity you have in your home is to make improvements on said home. Especially if you plan to be selling your home in the near future, borrowing some money on the property in the hopes of then selling it for a larger profit can be very beneficial. According to Marcie Geffner, a contributor to BankRate.com, making renovations on your home using a home equity line of credit can be an even better idea if your home has recently risen in value, which would give you an ever greater cushion of money to work with.
You Require A Decent Sum Of Money
Home equity lines of credit shouldn’t be used for every circumstance you find yourself in where you require an influx of money. Because this line of credit can be risky for you and your family if you’re unable to pay on it, the editors of NerdWallet.com recommend only looking into this option if you need a larger sum of money. If you merely need a few hundred or thousand dollars, you might have better luck with a credit card. But if you need a decent amount of money to purchase a vehicle or something similar to this, that’s when it may be a smart plan to look into getting a home equity line of credit.
You Want To Pay Off A High-Interest Rate Debt
Another time that you may want to consider getting a home equity line of credit, other than wanting to make large purchases, is when you need to pay off a large amount of debt. According to Teresa Mears, a contributor to U.S. News and World Report, consolidating a debt accrued through a high-interest credit card could be a great way to use a HELOC. It could also be used to pay off debt from medical bills or debt brought on through unemployment. However, this is only going to be a good idea if you no longer are in the situation that got you into debt in the first place.
If you’ve been thinking about getting a home equity line of credit, ponder the points mentioned above to see if this option would be a good fit to help you and your family gain some financial freedom.