7 reasons you should get a HELOC

Feb 13, 2023

HELOCs are a wonderful way to fund almost any big-ticket purchase or spending.

HELOCs are becoming increasingly popular to access equity in your home. Here are seven reasons why you should consider getting a HELOC now:

Reason 1: You can finance home improvements.

Want to put in a patio or an addition on your home? You can get a HELOC to finance home improvements. HELOCs are tax-deductible if used for home renovation projects. This means that you can potentially save even more money by getting a HELOC.

Should I get a HELOC?

Whether or not you should get a Home Equity Line of Credit (HELOC) depends on your individual financial situation and goals. A HELOC allows you to borrow against the equity in your home, which is the difference between your home's value and the amount you owe on your mortgage.

If you need access to a large amount of money for a specific purpose, such as home renovations or consolidating high-interest debt, a HELOC can be a good option since it typically offers lower interest rates than other forms of credit. However, it's important to remember that a HELOC uses your home as collateral, so if you are unable to make the payments, you risk losing your home.

Before applying for a HELOC, consider your ability to make the payments and the potential risks. It may be helpful to speak with a financial advisor or a lender to determine if a HELOC is the right choice for you.

Understanding Home Equity Lines of Credit (HELOCs)

When you have a Home Equity Line of Credit (HELOC), you will need to pay interest on the amount of money you borrow. The interest rate on a HELOC is typically variable and can change over time based on market conditions.

Unlike a traditional loan, with a HELOC, you only pay interest on the amount of money you borrow, not the full credit limit. For example, if you have a HELOC with a credit limit of $50,000 but only borrow $10,000, you will only pay interest on the $10,000 you borrowed, not the full $50,000.

It's important to remember that the interest you pay on a HELOC is typically tax-deductible if the funds are used for home improvements, but it's always best to consult a tax professional for advice on your specific situation.

Keep in mind that if you are unable to make the payments on your HELOC, you risk losing your home, as the loan is secured by your home's equity. Therefore, it's important to carefully consider your ability to make the payments before taking out a HELOC.

Reason 2: You can cover emergency expenses or consolidate debt.

You might have your emergency fund completely tapped out. If that’s the case or if you have other debts, a HELOC might fit the bill. You might not want to tap into other investments because you’ll pay capital gains taxes.

Reason 3: You can get a HELOC for any other reason.

Technically, you can use a home equity loan to pay for anything but you might want to use the money for larger expenses. Here are some of the most common uses for home equity loans. Take a look at a few other reasons you might want to use a HELOC for besides home repairs or remodeling your home:

Medical expenses: Did you or a family member have an emergency, undergo major surgery or spend a long stint in rehab? These types of medical expenses can result in high medical bills.
Education: A HELOC can help pay for private school or college.
Starting your own business: If you feel fairly assured that your business will take off, you can use a HELOC to start your own business.

No matter why you decide to tap into a HELOC, remember that you’re using your home as collateral, which means you could lose your home if you fail to make your payments.

Reason 4: You want to tap into low interest rates.

This may be a good time to consider a HELOC, because the Federal Reserve has kept interest rates low due to the damage COVID-19 has inflicted on the economy. It might be cheaper overall for you to pay off high-interest debt with a HELOC.

Reason 5: You can use it as a backup plan.

If you are self-employed or have an irregular income, a HELOC can act as a financial safety net. If you suddenly find yourself unemployed, the HELOC can help cover expenses until you find another job.

Reason 6: Rates are lower then unsecured borrowing

Compared to unsecured credit cards or personal loans, HELOCs usually have much lower interest rates. This can save you a lot of money overall.

Reason 7: Hitch makes it easy.

Hitch is the simplest way to get a HELOC. And you can get started from the comfort of your own home. All you need is five minutes and your most recent tax return. So what are you waiting for? Get started today.

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2158 NW Toussaint Drive. Bend, Oregon 97703

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1. Qualified applicants may borrow up to 95% of their home’s value. This does not apply to investment properties.

2. HELOCs have a 10-year draw period. During the draw period, the borrower is required to make monthly minimum payments, which will equal the greater of (a) $100; or (b) the total of all accrued finance charges and other charges for the monthly billing cycle. During the draw period, the monthly minimum payments may not reduce the outstanding principal balance. During the repayment period, the borrower is required to make monthly minimum payments, which will equal the greater of (a) $100; or (b) 1/240th of the outstanding balance at the end of the draw period, plus all accrued finance charges and other fees, charges, and costs.The lender will calculate this amount by taking the outstanding Account Balance on the last day of the draw period and dividing it by 240 months and then adding any finance charge that accrues but remains unpaid during the monthly billing cycle plus any other fees, charges and costs to the fixed principal payment that is due. During the repayment period, the monthly minimum payments may not, to the extent permitted by law, fully repay the principal balance outstanding on the HELOC. At the end of the repayment period, the borrower must pay any remaining outstanding balance in one full payment.

3. The time it takes to get cash is measured from the time the Lending Partner receives all documents requested from the applicant and assumes the applicant’s stated income, property and title information provided in the loan application matches the requested documents and any supporting information. Most borrowers get their cash on average in 21 days. The time period calculation to get cash is based on the first 4 months of 2024 loan funding's, assumes the funds are wired, excludes weekends, and excludes the government-mandated disclosure waiting period. The amount of time it takes to get cash will vary depending on the applicant’s respective financial circumstances and the Lending Partner’s current volume of applications. Closing costs can vary from 3.0 - 5.0%. An appraisal may be required to be completed on the property in some instances.

4. Not all borrowers will meet the requirements necessary to qualify. Rates and terms are subject to change based on market conditions and borrower eligibility. This offer is subject to verification of borrower qualifications, property evaluations, income verification and credit approval. This is not a commitment to lend.

5. The content provided is presented for information purposes only. This is not a The content provided is presented for information purposes only. This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. Other restrictions may apply.