If you’re considering a kitchen remodel or another big expense, you might want to look into a home equity line of credit, or HELOC.
This type of loan lets you tap into a considerable percentage of the equity you have in your home, which is the difference between its appraised value and any amount you still owe on your first mortgage.
A HELOC is a lot like a credit card, in that you can withdraw money whenever you need it, rather than getting a fixed lump sum. HELOCs, however, tend to have much lower interest rates, although these rates are often variable and can rise or fall over time.
When considering a HELOC, be sure to check with your financial institution about any upfront costs, such as an appraisal, application fee, title search, or attorney fees – and any fees that might be required during the life of the loan.
While a HELOC can be a great source of funding to meet your needs, it’s important to remember that anything you borrow will need to be repaid. And since it’s secured by the value of your house, if you can’t repay your debt, the lender might be able to force you to sell your home to recover the amount owed.