Whether you’re trying to conquer life or overcome an obstacle, taking advantage of home equity loans can be a smart way to achieve your goals.
Similar to other types of loans, home equity loans can be used for many purposes, including such things as paying for those holiday expenses coming up over the next several weeks. Borrowers would receive the loan in one sum and pay it back, as opposed to having a revolving line of credit like they would with a credit card.
Home equity is the difference between what you owe on your home and what it’s currently worth, and a home equity loan uses your home as collateral. For that reason, home equity loans are most often used for one-time, large-scale expenses.
Following are five of the most common ways borrowers use home equity loans:
1. Renovating their homes
Upgrading, repairing, or extending a home may be a clever way to use a home equity loan. Renovations may possibly increase the value of your home, thus increasing the equity of your home.
2. Consolidating their debt
Having bills coming in from multiple sources can be extremely stressful and overwhelming, and it may even result in more interest piling onto the individual debts. Many homeowners use home equity loans to consolidate debt in an effort to stabilize their expenses and more accurately plan for the future.
3. Sending their kids to college
The average yearly tuition for colleges in Georgia for the 2020-2021 year was $4,739, and books and supplies cost about $1,300 per year per student. (By the way, that’s less than the national average, which is $6,852 per year for tuition alone.) Multiply that by four years and account for likely tuition increases, and you’re talking about $25,000 to send a child through college. And that does not account for the cost of living on campus, gasoline, meals, and so on.
Clearly, college is one of the largest expenses for families, but saving up isn’t always an option. They also might not be eligible for government assistance. For that reason, home equity loans can be a valuable resource to help students complete their college careers.
4. Paying for one-time life events
While that $25,000 or so can last four years for college, a wedding can easily use it all up in one day. The average cost of a wedding in Georgia is $20,000.
That’s one of several costly major life events where families may need to use home equity loans.
Another is a funeral, especially if it’s unexpected. In Georgia, the average traditional funeral costs about $4,500. Nationwide, the average funeral costs about $9,000.
5. Making a major purchase
Some homeowners use home equity loans for large-scale purchases, such as a car, boat, or vacation of a lifetime. Although borrowers should consider all their financing options carefully, this may be a convenient solution if other possibilities are not feasible.
Do you want to know more about how to use home equity loans to your advantage, or would you like to discuss other financing options that may be available to you? If so, contact Georgia Heritage Federal Credit Union by sending us a message online, calling us at (912) 236-4400, or visiting ghfcustaging.wpengine.com.