After you take out a mortgage and purchase a home, each payment you make helps you build home equity. As equity is built up, you may be able to tap into it if needed through a line of credit.

What is a home equity loan?

Homeowners who have equity in their properties are able to apply for a home equity loan, which gives them access to funds through a loan or revolving line of credit. The first option enables you to receive a fixed-rate, lump-sum payment that is required to be repaid in a certain period of time. Meanwhile, the second option provides you with a revolving line of credit that can be utilized for numerous expenses. You will be Pre-approved for a line of credit and when you need money, you are able to borrow against that amount.

What are the benefits of a home equity loan?

No matter if you opt for the lump-sum loan or revolving line of credit, being able to secure a home equity loan can provide many benefits, such as:

• Consolidate other debts: Do you find yourself stuck with piles and piles of high interest credit card debt and no way out? Well, using a home equity loan you may be able to consolidate that debt at a much lower interest rate. Interest is what makes your debt cost so much, and with the low rates of home equity loans you can limit the damage and get yourself back on track.
• Make repairs or add on to your home: A home equity loan is a great way to fund major repairs or house add-ons that will eventually add more value to your home.
• Pay for your child’s education: With the cost of college rising nearly every year, parents and students are finding themselves more in debt. To help set your child up for success after graduation, you may want to assist them with paying for their education. Instead of taking out costly student loans, you could tap into the equity of your home. With low interest rates and tax deductible payments, this may be a better option for some people than traditional student loans.