You’re lucky to own a home in cities half-filled with renters, but that doesn’t mean there aren’t serious financial stresses. Nothing about inflation and rising interest rates helps to soothe homeowners’ anxieties.
Life was always expensive, but it feels like the cost of essentials is rising, and it’s hard to say where it will end. Thankfully, homeowners have an incredible financial asset they can lean on — their home!
Please read on if you’d like to know more about a few forms of possible relief.
HELOC
A HELOC, or home equity line of credit, is a common way for homeowners to draw on the equity they’ve built up when they need quick access to a substantial amount of cash. The mortgage payments you’ve made over the years can help you reach financial stability before the term is up, but you need to be tactical and cautious.
In a HELOC, you get a revolving source of credit you can borrow as needed and repay according to a specified rate at a specified time. It’s like a credit card. HELOCs help you get lower interest rates than you’d get otherwise because the lender knows you’re staking something substantial on what you’re borrowing — your home. This can cut both ways.
You’ll love getting better borrowing terms, and HELOCs tend to be approved quicker than other loans, meaning the money is there when you need it. However, the failure to repay can be severe, even including the loss of your home.
Home Equity Loans
A home equity loan is like a HELOC, except instead of a revolving amount of money from which you can borrow, the borrower receives a lump sum payment in their account. Also, like a HELOC, they get better borrowing rates by using their home equity as collateral and need to repay the loan according to certain terms and timelines.
A home equity loan is commonly used to pay for large-ticket items whose final cost you’ll know in advance. HELOCs and home equity loans are often used to help pay for things like education, home repairs or renovations, emergencies, investment opportunities, and more.
Speak to a leading mortgage broker like Burke Financial to discuss which path is right for you or if another option will serve you better. It’s crucial that you rely on a brokerage accredited by the Better Business Bureau with deep relationships with a variety of lenders, not just banks.
Such brokerages work hard and closely with each client, no matter their level of credit, debt, or income. Their experts will listen to you describe your career and lifestyle goals and pick the right route for you.
A person’s home is their shelter from the elements and a haven from the stresses of daily life. It’s where you and your family grow together. It’s also a tremendous financial asset you can lean on in hard times. Just make sure you find a great brokerage to help you steer through what can be choppy waters.
