Did you know that you can borrow against your home’s equity? It’s true. A HELOC benefits homeowners in multiple ways. Not only is a home equity line of credit flexible, but it also offers some tax advantages. Your home is the key to funding your next big project. Are you ready? Read more below.
How does a HELOC work?
When you open a HELOC, you can borrow money using your home as collateral. As you repay your outstanding balance, the amount of funds available replenishes. Similar to a credit card, you can borrow against it as often as needed throughout your HELOC draw period.
What can a home equity line of credit cover?
Funds from a HELOC can go towards practically anything. It’s best-suited for long-term, ongoing expenses like home renovations, medical bills, or even college tuition. Additionally, many borrowers us it to consolidate debts into one payment.
Best of all, Achieva provides rates lower than your standard credit card. View our promotional HELOC offer here, or call 844.658.3702 for details. Achieva Credit Union is an equal housing lender.
HELOCs offer flexibility
One of the most helpful HELOC benefits is flexibility. Homeowners decide how much they want to borrow within their approved terms. Keep in mind that pre-closure penalties exist with most offers. Because of that, most use it as an emergency fund rather than closing.
Is a HELOC tax-deductible?
Interest paid on home equity lines of credit is only deductible when you use the proceeds to buy, build or substantially improve your home that secures the loan. For example, interest on a HELOC used to add to an existing home is typically deductible. However, interest on the same loan used to pay expenses, such as credit card debt, is not. The consumer should consult a tax adviser for further information regarding the deductibility of interest and charges.
Does a home equity line of credit improve your credit score?
The impact a HELOC has on a credit score depends on the account. If the borrower doesn’t use the entire credit line, their utilization ratio falls. Having fewer maxed-out accounts could potentially raise their credit score.
Furthermore, having a home equity loan increases the diversity of accounts within a credit file. For this reason, a HELOC may also boost a credit score. Borrowers should request a credit report annually to track their creditworthiness.
HELOC benefits for homeowners
While a HELOC benefits homeowners in several ways, they are just one of many solutions available. We have several comparisons regarding HELOCS and refinancing. Read through our articles for homeowners to find the best resolution for you.
