What are the best uses for a home equity loan or HELOC?
A home equity loan or home equity line of credit (HELOC) could help you tap into the value you’ve built up in your home to access cash. You can use the funds for home improvements or repairs, debt consolidation, education or other unexpected expenses.
A HELOC is a revolving line of credit that you can draw from as needed. You can withdraw funds during the initial draw period, typically up to five years.
HELOCs offer flexibility, as you can borrow and repay multiple times during the draw period, with interest usually charged at a variable rate. After the draw period, you enter the repayment phase, where you must repay the principal along with interest.
Home equity loans offer a lump sum based on the value of your home that you can access quickly and repay as a second mortgage.
Are you ready to explore how cash based on your home’s equity can help you reach your homeownership goals? Apply Now
How to use home equity
Consolidate debt
Whether it’s student loans, hospital bills or credit card debt, paying off multiple bills with varying interest rates can quickly become frustrating. If you’re struggling with debt that you cannot seem to get out from under, consolidation with a home equity line of credit or home equity loan could offer relief by providing you with consistent payments and an exact end date.
Renovate your home
If that old kitchen needs new countertops, your roof leaks or you want to swap out an aging tub for a new shower, the cost might seem like a major deterrent.
But as a homeowner with equity in your property, a HELOC gives you access to money on an as-needed basis, often with a lower interest rate than a credit card or personal loan.
And a home equity loan allows you to use your home as collateral to access cash in the form of a lump-sum payment. In effect, you are borrowing against your built-up equity at a fixed rate determined by current interest rates.
Cover tuition costs
From private school fees to college tuition, borrowing funds using your home as collateral to pay for education costs is a common and simple way to access cash. You could leverage the value of your home with a HELOC or home equity loan to fund learning expenses for yourself or a family member.
Financial cushion
A HELOC can offer a financial cushion in times of higher expenses and rising prices. The inflation rate in the U.S. is currently 2.4%, but with some uncertainty about the direction of the prices of housing and consumer goods, it can be good to know that a HELOC can provide extra funds when needed.
Pay for special events
Is there a wedding coming up in your family that you want to help pay for? Or maybe there’s a once-in-a-lifetime trip you want to take that you need extra funds for. A OriginPoint HELOC or home equity loan could help provide the cash you need for these special occasions.
HELOC vs. cash-out refinancing
You can also tap into the equity in your home with a cash-out refinance. You’ll replace your current mortgage with a larger one and get back the difference in cash. The main difference between the two options is a cash-out refinance pays you in a one-time lump sum, while a HELOC offers more than one draw over a specified amount of time. A HELOC also comes with interest rates generally much lower than a credit card or personal loan, options that could cost a good deal more over time.
If you’re ready to explore what tapping cash based on your home’s value could do for you, apply now for a OriginPoint HELOC or home equity loan and get started on your financial future and savings goals! Apply Now
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.
The OriginPoint 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 only available in California, Washington, Illinois, and Indiana. 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 OriginPoint 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.
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Guaranteed Rate, Inc. does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Guaranteed Rate, Inc. Guaranteed Rate, Inc. its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.
More information about HELOCs available here
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Guaranteed Rate for current rates and for more information. All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Guaranteed Rate, Inc. does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Guaranteed Rate, Inc. Guaranteed Rate, Inc. its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action. Guaranteed Rate does not provide tax advice. Please contact your tax adviser for any tax related questions.
