Cities worldwide are experiencing housing crises forcing people to live outside their means. Unfortunately, it’s occurring at the same time as a shocking rise in the costs of goods and services.
Household staples like lettuce and cucumbers are skyrocketing in price, as are interest rates. It’s in this context that households are reevaluating their finances. Some homeowners look for financial help in the very thing sheltering them — their home.
Your home is a valuable asset that can help you navigate today’s volatile economy. Learn different ways to financially leverage your home and make it work for you.
HELOC
A HELOC, or home equity line of credit, provides homeowners with a flexible and affordable way to borrow large sums of money quickly. Essentially, the home is put up as collateral so lenders feel reassured and give more generous terms than they would otherwise.
A HELOC from industry mortgage brokers like Burke Financial is a great way to get the money when you need it. For example, many people use it for emergency home repairs. If there’s a leak in your roof or your basement is flooding, you may not have time to complete a gruelling paperwork process.
A HELOC, as its name suggests, is a line of credit from which borrowers can draw and repay as they go. The terms can be adjusted and tweaked as needed, so speak to an experienced mortgage broker about the right options for you.
Home Equity Loans
A home equity loan is like a HELOC, except instead of access to a revolving line of credit, the borrower gets a lump sum payment in their account. A home equity loan may be preferred when you know precisely how much money you need.
If you’re going through a large, ongoing home renovation, you probably won’t know what the final bill will be until you get it. Such situations may be optimal for a HELOC, but home equity loans are also very commonly used. If you’re facing uncertain project costs or requiring interim financing, exploring bridge loans as an option could provide valuable flexibility.
While financial experts insist that the borrower can legally use the funds for whatever purpose they choose, it may be wise to use them judiciously because failure to repay the loans comes with steep penalties — using your home as collateral could result in the loss of your home.
You are free to leverage your home to pay for things like a vacation or a new car, but then you’ll have to pay for these things and the borrowing costs. If the borrowed money is spent on things that increase the value of your home, like repairs or a renovation, you can offset the costs or even make a net profit.
Everybody’s financial situation and lifestyle goals are different. The best thing you can do is speak to a mortgage broker about all your options to find the right one for you.
Homeowners are lucky to have a safe and secure place for them and their families to live and make memories, especially when the costs of so many things are rising quickly. If you can leverage your home to help stabilize your finances, it could give you the boost you need to make ends meet. Just be cautious and speak to an experienced professional who has your interests at heart.
