When Should You Use a Home Equity Loan? | St. Johns Bank
When the going gets tough, sometimes a home equity line of credit can help get you back on the right track.
Our team at St. Johns Bank wants to offer some perspective on what these loans are—and when they might be helpful.
What Is a Home Equity Loan?
With each payment you made on your mortgage, you built up your home equity. With a home equity loan, you are using the equity you have built up when paying on your mortgage as collateral on a loan.
If you happen to sell your home when you still own money on your HELOC loan, the bank will be paid before you do upon the sale of your home.
Because you are borrowing money and using your home as collateral, it can be a better way to pay off debt, as well as make a needed purchase, than any other type of personal loan.
When a Home Equity Loan Might Be Best
Let’s take a look at some circumstances when taking out a home equity loan could be a good idea:
You Need to Make Home Improvements
Home renovations are needed for a number of reasons. Whether you’re getting your home ready to sell or making it a more comfortable environment for your family, home renovations can add value to your home, as well as help you get top dollar when selling.
You Need to Pay Off Debt
Are you struggling each month to pay off credit card debt? Since the interest on credit cards is typically high, it can seem as if you are barely treading water.
With a home equity loan, you can pay off your credit cards and consolidate your debt so that you are just making one payment on one loan with hopefully a lower interest rate than your credit card debt combined.
You’d Like to Further Your Education
Are you looking to go back to school? Congratulations on making a life-changing decision!
Since you probably came to this decision without a college fund in the bank, a home equity loan can be an investment in yourself to fund your education. You could even see a substantial return on your investment since chances are that you will be making more money than you were before earning another degree.
Our home equity line of credit can help you handle anything that comes your way. Give us a call today to learn how to apply!