You may have heard of a home equity loan. Sometimes financial institutions refer to this type of loan as a second mortgage. Basically it’s using the equity you’ve built up in your home to take out a large amount of money for something specific. People use these types of home equity loans for a variety of things. They are divided into two categories, a home equity line of credit or a regular home equity loan, which is a large lump sum given to you.
At We Florida Financial many of our members take out home equity lines of credit or loans to finance certain types of large purchases. Here are the top 5 best uses for a home equity loan that you’ll see many people utilize.
Home Equity Use #5: Huge Ticket Purchases
Some of these large ticket items might be a down payment on a vacation home, a high-end car or boat, or even a fantastic once-in-a-lifetime vacation for you and your spouse. Or you might want to use the money to pay for a lavish wedding for your daughter.
Home Equity Use #4: Medical Expenses
When unexpected illness strikes your family, you may need extra money to pay off those bills or to take care of your family if you are ill and can’t work for a specific amount of time.
Home Equity Use #3: Educational Tuition and Fees
This might be for a graduate degree for you or to help your first child as they head off to an expensive out-of-state college.
Home Equity Use #2: Home Renovations
Home renovations are a popular way to use a home equity loan or line of credit. This can allow you to do major things like adding on another room to the house, improving the backyard area maybe with an in-ground pool, or to fix up some major problems in the house such as an old roof or broken driveway.
Home Equity Use #1: Pay Down Debt
Many people pay down high interest credit card debt with a lower interest home equity loan. This might be a good idea if your minimum monthly payments have gotten so out of control that you aren’t even making any progress in paying your debt off.
If you have any questions about what a home equity loan can do for your own financial situation, feel free to contact one of our member sales advisorsmember sales advisors at We Florida Financial. We're more than happy to go over your options so you can best figure out how a home equity loan can improve your money goals.