Article

6 Signs You Should Invest in an Equity Loan or Line of Credit

Posted by Erika Schorbahn Bronder on Dec 12, 2015 06:00:00 AM

Topic: ALL

Family of four standing in front of their new home

You’ve worked hard to build the American Dream of owning your home. Have you ever considered that it might be time to put your home to work? That’s right, your home is one of the largest investments you will ever make and there may be more dreams it can help build. Use the equity in your home as collateral for either a lump-sum Home Equity Loan or a Home Equity Line of Credit that can be continuously used and repaid. These six signs indicate that one of the two is right for you:

1. Your curb appeal is more like curb repeal.

We all know those homes in our neighborhood that may not be the largest or have the most robust yards. Yet for some reason, everyone is drawn to them making comments like:

  • "That house is so gorgeous.”

  • "I just love that yard.”

  • "It is a good quality home.”

  • "That looks well-built.”

Not your house? That’s because those homeowners know that maintaining the exterior of their homes is a valuable investment. By updating landscapes, exterior lights, siding, roofs, etc., you are going beyond home maintenance and strengthening the overall appeal. However, there may be a higher initial cost to do this, which is where an Equity Loan can help.

2. You find yourself saying, “Give me space”.

A number of owners want to stay in their homes but feel like they need more space, so for them, a Home Equity Loan is a wise investment. Most contractors will assess your situation and determine what can be done. Having a Home Equity Line of Credit behind you empowers you to make choices based on your budget and the long-term value it will add to your home. For instance, it can allow you to:

  • Add a closet

  • Build an exterior garage/shed

  • Finish a basement

  • Add square footage

3. As children leave the nest you want to help them fly.

Preparing for your children to leave the nest starts long before they are ready to spread their wings. No matter how diligently you prepare for education expenses there are often unexpected challenges. Being able to access a Home Equity Line of Credit can help them continue to soar no matter whether they face:

  • Moving expenses

  • Education that takes more years than initially planned

  • Emergencies

  • Travel costs

4. Because sometimes you just want to buy it.

Black Friday is practically its own holiday but that is not the kind of buying power I am talking about. There are times when having easy and immediate access to funds through a Home Equity Line of Credit can aid in negotiating a better price and terms on a large purchase. For example, when you purchase:

  • A used or new car

  • A boat

  • Recreational land

  • Auctioned items

5. To pay down the credit card merry-go-round.

Individual credit needs vary more than the weather changes in Wisconsin. Your tolerance for the amount of credit card debt you can comfortably carry will be different than your neighbor. You might feel like you are on the credit card merry-go-round while your neighbor with the same balances might consider it smooth-sailing. Depending on your situation, you may be able to get a better rate and pay these off sooner with a Home Equity Loan. Use caution and be sure to meet with your Bank Mutual Lender about your individual risk tolerance so you can make an empowered decision.

6. "911 - What’s your emergency?" For those times first responders can’t help.

There are emergencies in life where “911” is not going to be the number to call. Many homeowners do not have thousands of dollars lying around that they can spend on the unexpected emergency. Even those with a substantial savings are often uncomfortable using them for the unexpected. With a Home Equity Line of Credit, the borrower only pays interest if he/she uses it and accumulates a balance. This can be a handy way to access funds if:

  • Your dishwasher breaks and ruins the flooring

  • Your central air conditioning unit leaks fluid and needs replacing

  • A tree goes down on your garage

  • A pipe bursts and causes plumbing and flooding damage

Sometimes homeowner’s insurance will apply to emergency situations; however, in the interim having access to funds can lessen the burden and give you peace of mind.

The bottom line is that there are numerous ways your home’s equity might serve as a solution to your needs. Like a home, they are never one-size-fits-all. Partner with your Bank Mutual Lender to determine what is in your best interest and ensure you are protecting your future and working toward your individual goals. 

Request a consultation with a local banker!