Clark County Credit Union (Las Vegas, NV)

How to Use Home Equity: 3 Smart Things You Can Do With a Credit Union HELOC

Home equity lines of credit or HELOCs are a great way to quickly get much-needed cash at a reasonable interest rate. You simply borrow against your home value to fund cash as needed. However, as the Great Recession of 2008 proved, HELOCs can also get you in a lot of trouble if used the wrong way.

You can contact CCCU at 702-228-2228 to learn more about HELOCs and find out how much you may be able to borrow. In the meantime, here’s a look at some good reasons to tap into your home’s equity as well as why you should give some expenditures a second thought.

How Does a HELOC Work?

Piggy bank and coin jar with Home Equity savings coin jarHELOCs are often compared to credit cards, except in this case, you’re borrowing against your home’s equity. You can borrow funds up to a specific credit limit set by the credit union and then pay back the borrowed amounts along with interest. Just like with a credit card, as you pay off your balance, the amount of available credit is replenished.

Home Improvement

Experts agree that home improvement projects are the smartest thing to do with HELOC funds. Renovations, upgrades and preparing a home for sale are common reasons homeowners tap into a HELOC. Investments such as garage and entry door replacements, kitchen renovations, a new deck or a new roof often pay for themselves by increasing your home’s value. There’s a tax advantage to using a HELOC for home improvements, too. When you use the money to “buy, build, or substantially improve” your home, you can deduct interest on anywhere from $375,000 to $750,000 worth of qualified loans.

College Costs

Student loans are still the most common way people pay for an education, but if mortgage rates are lower than student loan rates, it’s worth exploring if using your HELOC is a better idea. Keep in mind the risk is higher with a HELOC because you can lose your home if you default on the loan.

Debt Consolidation

If the interest rate on your home equity line of credit is lower than the rate on credit cards and other debts you owe, you can simplify your payments and reduce interest costs by using a HELOC to pay off those other debts. To keep this a “smart” move, avoid running up new debt or you’ll find yourself with even higher monthly payments.

Be HELOC Smart

Some people also use a HELOC to pay for once-in-a-lifetime events like weddings or exotic vacations. Others fund investment accounts or rental properties to prepare for retirement. Because there’s no guarantee the housing and stock markets will perform as well as expected, these choices come with varying degrees of risk. Proceed with caution!

How to Get Started with a Credit Union HELOC

A home equity line of credit can be the financial cushion you need to ensure you’re ready for anything. Ready to learn more about credit union HELOCs, including how to apply? Contact CCCU today to talk to our team about all your home borrowing options. You can reach us by phone, email, mail, and chat.

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