If your home is in need of some renovations or remodeling, chances are, you are looking for a lender so you can borrow the necessary money to make the updates. You have a lot of options, from home equity loans to home improvement loans through a local credit union. In most cases, however, the best option will be a HELOC, or home equity line of credit. Here are three reasons why this is a great option for most homeowners who need to remodel.
You can take out money as you need it.
A home equity line of credit is sort of like a credit card. Your lender allows you to borrow small amounts against the equity of your home as you need them, rather than giving you one lump sum like you would get with a home equity loan or home improvement loan. The ability to draw these small sums a little at a time benefits you in a few ways:
Your interest is usually tax deductible.
When you start paying back the money you take out in a HELOC, the interest you pay on that money will usually be tax deductible since it will either be rolled right into your mortgage payment or legally considered a mortgage payments. This can save you hundreds of dollars a year on your taxes -- and you can put those savings towards paying off your HELOC even faster!
You can take your time to pay.
Some other types of loans may require you to pay off the balance in a short period of time, like 2 years or 5 years. But with a HELOC, the amount you borrow will be deducted from your home equity, and you'll pay back the loan like a mortgage -- over a 15 or 30-year period. This means your monthly loan payments will be very small and affordable, which is good news especially if you have a lot of other payments to make each month.
Share