Is a Home Equity Loan Right for You?
Learn when to apply for home equity loans and home improvement loans
As a homeowner, you probably already know that home equity loans allow you to access extra funds when you need them, using your home as collateral. It’s more difficult, however, to know when you should do this. Home equity loans can help alleviate debt and other money issues, but they’re still loans with interest you’ll have to repay. For this reason, it’s best to take out a home equity loan or home improvement loan for large expenses that are out of the ordinary. Here are some situations where this could make sense for you.
Major home repair or appliance failure
It may feel like home improvement projects never end when you own your home. Don’t get caught unprepared when the driveway needs new concrete, the air conditioning breaks or the roof leaks. If you’ve lived in the home for several years and have built equity, you can apply for home improvement loans to cover these costly expenses. Rather than empty your bank account on the repair, use an equity loan to space the payments out over time.
Major life events
When you’re looking at an upcoming wedding or the birth of a child, you may see nothing but dollar signs. The cost of throwing a large party for your family and friends or adding a nursery to your home can be sizeable. Rather than running up credit cards or taking out personal loans with high interest rates, consider a fixed-rate home equity loan. With this loan, you’ll find lower interest rates and longer repayment terms.
Repairing an old car or buying a new one
Cars can be major drain on your wallet. When the transmission goes or the engine starts to fail, the bills can be staggering. Even replacing internal pumps and systems like the air conditioner can add up. If you want to hang on to a car that experiences major issues, you may want to consider a home equity line of credit. It works like a credit card, allowing you draw funds as you need them.
On the other hand, if you’ve decided it’s time to get rid of your old car and buy a new one, you may want to look into a fixed-rate home equity loan to help you do this. Rather than carry the debt and high interest rate of an auto loan, you can borrow that money for less through a home equity loan. You can get preapproved for this loan and start car shopping with more confidence, knowing your financing and spending limits ahead of time.
Steep medical bills
The stress that comes with an accident or serious medical diagnosis can only be compounded by receiving bills for hospital stays and treatment. In this situation, a home equity line of credit may be able to help you get a handle on your finances. This option however, should be carefully considered since you are putting your home on the line and often times medical bills can add up quickly.
Buying a second home
If you’ve been looking at vacation properties and have built substantial equity in your current home, a home equity loan may bring a second home within your reach. Because home equity loans don’t have closing costs like mortgages, you may find some cost-savings there. Additionally, you can enjoy the low rates of a home equity loan, which is secured by your first home. There’s certainly a lot of responsibility and cost associated with owning two homes, but tapping into equity may make it more feasible than you thought.
Apply for a home equity loan from Citizens Bank
If you find yourself in one of these situations or something similar, start the home equity loan application process by answering a few questions online, and a Home Loan Originator will contact you by end of the next business day to complete your application.
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