7 Best Uses for a Home Equity Line of Credit (HELOC)
A home equity line of credit (HELOC) can be a great way to tap into a new source of funds to pay for just about anything. Unlike some other types of loans, like home renovation loans, Guaranteed Rate Affinity HELOCs don’t limit how you use your funds.*
And because Guaranteed Rate Affinity HELOCs have such a fast time to fund — especially compared with a traditional HELOC — you could have money in your account in as little as five days.**
With so many ways to spend your HELOC cash, it can be tough knowing which direction to take. We’ve outlined seven of the best uses for a Guaranteed Rate Affinity HELOC to give you some inspiration for your newfound financial inspiration.
7 WAYS TO USE YOUR HELOC CASH
- Remodel your kitchen
- Replace your roof
- Finance other home improvement projects
- Consolidate high-interest debt
- Cover college tuition
- Pay tax bills
- Foot the bill for a special event
1. Remodel your kitchen
Every home chef dreams of cooking in their own state-of-the-art kitchen — we’re talking a range hood, breakfast bar, kitchen island, shaker cabinets and more. Such luxury can come with a pretty hefty price tag, but a HELOC lets you use your home’s available equity to cover those costs. You’re essentially taking the money you’ve already invested in your house and putting it back into your home.
2. Replace your roof
A leaky roof can be a costly nightmare, and you can’t put off making those repairs. But a full replacement is one of the most expensive repairs you’ll ever need to make as a homeowner. What’s a homeowner to do, especially if you’re strapped for cash?
Guaranteed Rate Affinity’s new HELOC offers one of the quickest turnaround times you’ll find. You may be approved for a line of credit within minutes and your funds could be deposited into your bank account within 5-10 days. There’s no need to delay an expensive — but absolutely necessary — roof repair if you have the home equity available to cover that cost.
3. Finance other home improvement projects
There’s no shortage of home improvement projects to tackle: add an en-suite bathroom to your bedroom, turn your unfinished basement into its own living area or even build a pool in your backyard. These may all seem like impractical additions if you don’t have tens of thousands of dollars burning a hole in your bank account. But a HELOC can offer more financial flexibility to turn your house into the home of your dreams.
4. Consolidate high-interest debt
Getting a handle on high-interest debt can be tough. It might feel like you can never get ahead with the high-interest payments that can come with credit cards and payday loans. One of the advantages of a HELOC is an interest rate that’s typically lower than many other types of financing.
Because HELOCs offer much lower interest rates compared with personal loans and credit cards, they can be a great vehicle for consolidating that debt. You’ll clear the books on your high-interest accounts, giving yourself more financial flexibility (not to mention peace of mind).
5. Cover college tuition
Higher education costs have been steadily rising for years. According to U.S. News & World Report, the average tuition to attend an in-state, public university is $10,388 per year. If you or your children plan to go to a private school or an out-of-state university, you can expect that number to be even higher.
How can you cope with sky-high tuition? Just tap into the funds provided by a HELOC. You don’t need a college degree to see how easy that is.
6. Pay tax bills
Salaried employees usually don’t have to worry too much about owing income taxes each April due to tax withholdings. But if you’re self-employed or an independent contractor, you may need to pay an entire year’s worth of income tax all at once. Coming up with several thousands of dollars on short notice can be tricky, to say the least.
Again, having a line of credit to draw from whenever necessary can be a huge help. The caveat here is that a traditional HELOC may require a 60-day lead time to fund your loan, so you’ll want to plan accordingly. Although, if you use Guaranteed Rate Affinity’s new HELOC, you could have access to your HELOC funds in 5-10 days.
7. Foot the bill for a special event
Budgeting is a homeowner’s best friend, but if you don't have the funds on hand to cover large-ticket items, a HELOC can work too. Special events like weddings can get pretty pricey, and taking on high-interest debt will only make them more expensive in the long run.
If you have a home equity line of credit, that’ll open a new source of funds to pay for everything from hotel rooms and event venues to caterers and entertainment. That’s one less thing to worry about so you can enjoy these once-in-a-lifetime events.
Find the best use for your HELOC
Can you use a home equity line of credit for anything? Yes, you can! Once your line of credit is open, you can use those funds any way you like during the draw period: pay for recurring expenses, one-off costs, existing debts — you name it.
A HELOC is a major financial obligation — you’re taking out a second mortgage on your home, after all. So, you want to be absolutely certain that you’re ready to take on the responsibility to make two payments each month. In the right circumstances, though, a HELOC gives you more breathing room to pay for any cost that might come up.
Ready to take advantage of your home equity? Start by getting in touch with a loan officer today to enjoy all the benefits that a HELOC has to offer.
*Guaranteed Rate Affinity LLC home equity line of credit (HELOC) is an open-end product where the full loan amount (minus the origination fee) will be 100% drawn at the time of origination. The initial amount funded at origination will be based on a fixed rate; however, this product contains an additional draw feature. As the borrower repays the balance on the line, the borrower may make additional draws during the draw period. If the borrower elects to make an additional draw, the interest rate for that draw will be set as of the date of the draw and will be based on an Index, which is the Prime Rate published in the Wall Street Journal for the calendar month preceding the date of the additional draw, plus a fixed margin. Accordingly, the fixed rate for any additional draw may be higher than the fixed rate for the initial draw. This product is currently not offered in the states of New York, Utah, Kentucky, South Carolina, Hawaii, Texas, West Virginia, Delaware and Maryland. The HELOC requires you to pledge your home as collateral, and you could lose your home if you fail to repay. Borrowers must meet minimum lender requirements in order to be eligible for financing. Available for primary, second homes and investment properties only. Dependent on minimum credit score and debt-to-income requirements. Occupancy status, lien position and credit score are all factors to determine your rate and max available loan amount. Not all applicants will be approved. Applicants subject to credit and underwriting approval. Contact Guaranteed Rate Affinity for more information and to discuss your individual circumstances. Restrictions Apply.
**Approval may be granted in five minutes but may be subject to verification of income and employment. Five business day funding timeline assumes closing the loan with our remote online notary. Funding timelines may be longer for loans secured by properties located in counties that do not permit recording of e-signatures or that otherwise require an in-person closing. In addition, funding timelines may be longer if we cannot readily verify that your property is in at least average condition with no adverse external factors with a property condition report and may need to order a desktop appraisal to confirm the value of your property.
For more information about HELOCs please go to https://files.consumerfinance.gov/f/201401_cfpb_booklet_heloc.pdf