Are you looking to keep up with the Joneses, those ambitious neighbors who just redid their kitchen?
Maybe your HVAC system finally conked out after a summer’s worth of hard work, and you need help ASAP? If you want to upgrade your current home or renovate a home you just bought, a home equity line of credit (HELOC) may be right for you.
Before we get into the details, let’s look at the basics. Equity is the difference between what you owe (which might include mortgages, loans, and lines of credit) and the actual value of something (in this case, your home). Simply put—the more of your mortgage you’ve paid off, the more equity you have in your home.
You can withdraw money from a home equity line of credit whenever you need to. In many ways, a HELOC acts like a credit card. But, unlike credit cards, which carry higher interest rates because the funding isn’t secured, a HELOC is backed by the equity you have in your home. This gives you the flexibility to borrow against your home’s equity, pay it back, and borrow again when the need arises—all at much lower interest rates than you’ll traditionally receive from credit card companies.
What Can I use a HELOC For?
According to Remodeling Magazine’s 2018 Cost vs. Value Report, there are any number of high-return home improvements that can add big value to your home—renovations that can be funded through HELOCs:
| TOP FIVE REMODELING PROJECTS (Cost vs. Value) | Job Cost | Resale Value | Cost Recouped |
|---|---|---|---|
| Garage Door Replacement | $3,470 | $3,411 | 98.3% |
| Manufactured Stone Veneer | $8,221 | $7,986 | 97.1% |
| Deck Addition (Wood) | $10,950 | $9,065 | 82.8% |
| Minor Kitchen Remodel | $21,198 | $17,193 | 81.1% |
| Siding Replacement | $15,072 | $11,554 | 76.7% |
Except for minor kitchen remodels, exterior home projects generate higher returns on investment than interior renovations. If you renovate with resale in mind, you can really reap the benefits.
In addition to making repairs and renovations, homeowners use HELOCs to pay for a variety of major expenses, including tuition and education costs, debt consolidation, and whatever unplanned expenses life may throw at them. Since a HELOC is a variable-rate loan that uses your home as collateral, you may want to only use it to finance home-related projects and renovations. Our mortgage professionals can help you decide if a HELOC is right for your financial situation.
We’re Here to Help.
Although a HELOC offers you a simple way to finance your home’s renovations, there’s no right or wrong answer—every family’s goals and dreams are different from the next. Want to know how to apply for a HELOC? Visit your local BayCoast Bank location, apply online, or call 888-806-2872 today and let one of our experienced BayCoast Bank lending professionals walk beside you as you explore your financing options.
