What’s the Best Way to Use a HELOC?

March 31, 2022 by Partner Colorado Credit Union

With home prices still on the rise, it’s a great time to tap into your home’s equity using a Home Equity Line of Credit (HELOC). Tapping into your home’s equity will give you the funds you need for large expenses. With a No-Closing-Cost HELOC from Partner Colorado, there’s a quick turnaround time. If approved, you’ll receive the funds in one lump sum within a few days. A HELOC is a revolving credit line that allows homeowners to borrow money against the equity in their home, or which is the value of your home minus the amount you still owe on your mortgage. Since a HELOC is backed by a valuable asset, it is secured debt that generally has a lower interest rate than unsecured debt, like credit cards or personal loans.There are no restrictions on how to use your HELOC funds, but since you’re borrowing against your home, it’s important to choose wisely when deciding how to use the funds.

Here are a few of the best ways to use a HELOC.

Home improvements

One of the most popular uses of a HELOC is for home renovations and improvements. These can be as major as adding a 1,000-square-foot extension to your home, as minor as replacing old carpet with new hardwood flooring, or anything in between. Using your home’s equity for home improvement projects is a smart choice for multiple reasons. For one, the money you put into the renovation acts as an investment. If you choose improvements that increase your home’s value, you can make back the money you spent or even see a return when you sell your home. If you plan to use your HELOC for home improvements, it’s best to go for improvements that add lasting value to your home, like remodeling your kitchen, bathrooms or adding a deck.

Debt consolidation

Another popular use for a HELOC is to consolidate high-interest debt. Paying off multiple debts with high interest rates can be difficult to manage. Worse, the heavy interest rates mean more of the borrower’s money goes to the lender and less goes toward paying down the principal of the debts. Using a HELOC to consolidate debt to a single and lower-interest loan can slash a pile of debt by thousands of dollars and may also help shorten the repayment time by several years.

College education

Funding a college education through a HELOC instead of a high-interest student loan can be a smart choice. Also, homeowners struggling to meet their student debt payments without defaulting on the loan might want to use their home’s equity to pay off the debt and replace it with a more manageable low-interest loan. It’s important to note paying off a federal student loan with home equity might not be the best choice, as these loans are sometimes eligible for partial or complete forgiveness.

Before you take out a HELOC

Before making either of these moves, it’s important to run the numbers so you’re sure you can easily meet the regular loan payments. Otherwise, you risk defaulting on the loan and losing your home. If you want to calculate how much equity you have in your home, use our Equity Calculator.

If you’re ready to take out a HELOC, look no further than Partner Colorado. Our rates and terms are competitive. And now, with our HELOC Visa® with Rewards, you can access the credit available in your HELOC and make purchases anywhere Visa is accepted—online, over the phone or in person. Plus, when you make $500 in purchases using your new HELOC Visa® with Rewards now through May 14, 2022, you’ll score $100 cash back.* Give us a call at 303.422.6221 or visit PartnerColoradoCU.org to apply today.



*To receive $100 cash back, you must use your Home Equity Visa Card with Rewards to make a single or cumulative purchase(s) totaling $500 or more made between February 14-May 14, 2022. $100 cash back will be deposited into your Partner Colorado savings account within 10 days after meeting the requirements.

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