Why it makes sense to set up a home equity line of credit before you need it.

Having a home equity line of credit (HELOC) in place before you need cash can mean the difference between facing a financial crisis and having hassle-free access to funds in a pinch. Discover these three reasons many homeowners establish a HELOC as a source of back-up funding.

A less expensive borrowing option

Unless your credit card has an ultra-low interest rate, a HELOC almost always charges lower interest. As a hypothetical example, the annual cost of borrowing $5,000 on a HELOC at 7% is $350. The same amount financed on a credit card with a rate of 21% would rack up $1,050 in interest.

Easy access in an emergency

Emergencies of any kind are stressful; having money on-hand can help ease these situations. While we recommend having an emergency savings account, it’s possible that the amount saved in that fund isn’t enough. Having an established HELOC provides quick access to funds when the unexpected happens.

HELOC fund can be used for anything

Many people use HELOCs because there are no restrictions on how the money can be used. Home improvements, vehicles, emergencies and tuition are common uses, but a homeowner can use HELOC money for virtually anything.

Consider this one thing before getting a HELOC

HELOCs are a powerful financial tool that uses home equity as collateral and allows homeowners to accomplish many things. However, when you borrow money through a HELOC you reduce your home equity until the loan is paid off. If the loan isn’t paid back, you risk foreclosure. That said, the vast majority of homeowners pay off their HELOCs; according to Experian, only 0.54% of HELOCs were delinquent in 2022.

Turn to us for your HELOC

When you’re ready for a HELOC, turn to Consumers for competitive rates. You can borrow up to 85% of your home’s value. And as you repay the loan, you can redraw on your available credit.

 

Consumers helps thousands of members finance land, first and second homes, and home improvement projects each year. We’d love to help you with a mortgage or home equity line of credit; contact us online or call us at 800.991.2221.

*All loans subject to approval. Rates, terms, and conditions are subject to change and may vary based on credit worthiness, qualifications, and collateral conditions.