When researching home equity loans, you’ll soon realize that you can use the funds for almost anything imaginable — as long as it’s legal.
And of course, you don’t want to apply for a loan until you’re 100 percent sure of how you’ll use the money.
Tip: don’t apply with the idea that you’ll need the funds for “something” in the near future. Have a clear idea of what you hope to accomplish.
Here are five common uses for a home equity loan:
1. Debt Consolidation
Should you find yourself bogged down by debt, a home equity loan is one of the best ways out.
With this, you can bring several different types of debt — such as credit cards and personal loans — under the same roof.
Not only does this make it easier to manage, but you can also save money on interest charges and other fees.
2. Home Renovation
The longer you live in your home, the greater chance that you’ll one day want to take on a home renovation project.
This includes everything from a kitchen remodel to building an outdoor living space.
Maybe you have the opportunity to take a once in a lifetime trip with friends or family. Or perhaps you want to take a big family vacation before your children go away to college.
Once you calculate the overall cost of the trip, you can decide if a home equity loan is the best way to pay for it.
4. Medical Expenses
Even with health insurance, you could find yourself buried in medical debt.
It’s a hassle to deal with medical debt that spans several providers, including doctors, hospitals, and outpatient facilities among others.
With a home equity loan, you can consolidate your medical debt. This gives you a clear overview of how much you owe and when the debt will finally be paid off.
5. An Unexpected Expense
You never know what life will throw at you. An unexpected expense, such as the need for a medical procedure or home repair, could put you in a difficult financial spot.
By securing a home equity loan, you gain access to the funds you need to manage your way through this crisis.
While these are among the most common ways to use a home equity loan, there are many other options available to you.
Only you know why you need the money, how you’ll use the money, and how it fits into your budget.
If you decide that a home equity loan is just what you need, contact three to five banks to learn more about the application process.