3 Great Ways to Use a Home Equity Loan
A home equity loan lets you borrow a fixed amount of money, secured by the equity in your home. Because you receive your cash in one lump sum, home equity loans can be a good choice for covering large expenses. There are three types of costly goals in particular that often trigger people to look to their homes for cash—home improvement, vehicle purchases and life events.
Home improvement: Projects to upgrade your home are a great way to increase its value. Some improvements can also make it possible for your family to grow in the home you already love, rather than having to move to a new one. Places to focus include your attic, kitchen and bathroom, as well as replacing carpets and flooring.
Vehicle purchases: The average price of a new vehicle in the U.S. is $38,948.1 Because a home equity loan uses your house as collateral, you can sometimes get a better interest rate than you would with a regular auto loan. So, using a home equity loan to fund your vehicle could make sense. But, be sure to weigh any pros and cons.
Life events: The expense of owning a home doesn't have to mean skimping on life's biggest events or forgoing items on your bucket list. If it works financially for you and your family, use a home equity loan to cover the cost of an unforgettable milestone, such as your child's wedding, or a trip-of-a-lifetime.