Continually rising prices threaten family budgets. Many breadwinners are often scrambling to find ways to raise money and pay off current or future expenses. This is why many families often have more than one credit card to help them out in times of need. However, Odgen’s trusted financial service provider (wasatchpeaks.com) says that one option homeowners may have forgotten is the home equity line of credit (HELOC).
In the 2000s, home equity was a common way for people to secure money for their needs. But when housing prices started going down later in the decade, big lenders decided to freeze lines of credit. Many decided that HELOC was no longer the best way to get needed funds. But now, such lines of credit are strong once again.
A HELOC is like a credit card where you can use the money as needed within the draw period. This means that within a period — ten years, for example — one has access to these funds. Though there are still payments, these are usually minimal with the borrower required only to pay back the interest.
There are of course principal payments due and these come in the back half of the HELOC agreement. But the hope here is that after the draw period, the family situation has improved. As such, paying back the principal will hopefully be easier on the budget. Additionally, the HELOC’s interest is tax-deductible, which further helps the borrower’s situation.
Where to Use It
With this, many families have been able to use such credit to help with significant needs. These include home renovations, college tuition, medical emergencies or even business needs. Yes, the HELOC’s interest may be lower than a credit card or some other types of loans. Therefore, HELOCs are beneficial when scenarios like such come up.
So for those struggling at work or even in running a business, it is good to know that there is a financial lifeline to help you out before things become messy. If you own a home, know that there are more options to secure funds than you thought.