Homeowners have plenty of responsibilities. But with them comes a long list of benefits, like having a comfortable living space, being part of a neighborly community, and using built-up equity to gain access to low-cost credit lines. With few exceptions, HELOCs (home equity lines of credit) come with fixed rates that are favorable when compared to personal loans, credit cards, and many other types of borrowing.
For so many owners who choose to leverage the power of existing equity, the challenge is to decide the best way to use the newfound capital. Depending on how much money is available and what a person’s specific needs are, the list of potential uses is virtually endless. In the real world, though, the most creative outlets for HELOC cash fall into five areas.
Couples who are nearing retirement or already past working age use the funds for things like taking a once-in-a-lifetime trip. Younger homeowners have different priorities, which is why so many of them focus on paying for a child’s college education. What else do working adults and retirees use the credit lines for? They install swimming pools, purchase rooftop solar panels, or start home-based businesses. Review the following ideas about how to put HELOC money to good, creative use.
Take a Bucket List Vacation
Some people plan for years to take a special getaway to an exotic spot. Bucket list vacations are different typically than planning a relaxing vacation and can be pricey. Common choices are to attend a summer or winter Olympic Games competition, visit Antarctica, circumnavigate the globe, spend a few weeks for months in remote places, or return to one’s ancestral home. Whatever form the quest takes, homeowners can put their built-up equity to work and pay for air tickets, lodging, living expenses, and other trip-related expenses.
Finance a Child’s College Education
One of the most creative uses for HELOC proceeds is to subsidize a child’s college education. There are multiple student loan programs available for college-bound youth, but seldom can a person get enough to pay for an entire four-year education. That’s when it makes good sense to access the money in your home. Not only are interest rates more favorable than most other borrowing options, but homeowners can get fast access to cash to cover school and related expenses immediately.
When planning to assist a youngster with tuition, fees, textbook costs, and other expenses, try to get exact amounts for each item as well as the individual due dates on the charges. Some federal loan programs cover a percentage of tuition, depending on whether the institution is public or private. Have students exhaust federal, state, and school-sponsored financial resources before using HELOC capital.
If adding rooftop solar energy panels is a priority among your home improvement goals, using the power of equity is a reasonable and effective way to get the job done. Recent price reductions in the industry have made solar energy generation for homes a more viable solution than it was just a decade ago. Plus, scientific advances have made sun sourced energy much more efficient than earlier cell designs. Large solar installations in sunny geographic regions can deliver substantial monthly savings for owners.
Nowadays, it only takes about seven years, on average, to recoup the total cost of an array via lower utility bills. Still, the upfront expense of installing an extensive array can be pricey, which makes HELOCs more valuable as a payment method. There’s logical sense in using equity sourced funds to improve the long-term energy efficiency of your house.
Start a Home-Based Business
Working and retired adults choose to start small businesses and run them from a spare bedroom or den. Fortunately, the growth of online commerce has made it easier than ever to become an e-entrepreneur. Startup costs for common one-person companies can run into thousands of dollars, so it’s necessary to make a financing plan before launching a business. A credit line based on home equity is a straightforward way to fund a business idea right from the conception stage.
Install a Swimming Pool
For generations, a residential swimming pool has been a common goal for large numbers of working people. Having a private place to swim and relax in the sun is part of the American Dream, but the goal is out of reach for most adults. Contractors can be hard to find, depending on where you reside, but it’s usually the cost factor that keeps people from going through with the project. But, for those who have enough equity in their homes, it’s possible to fully finance a backyard swimming pool.