Life is full of financial challenges, and sometimes that includes major expenses you can’t easily pay for out of your everyday budget. When you don’t want to deplete your savings or run up your credit card balances, what can you do? A home equity line of credit, or HELOC, may be worth considering. Here’s a look at why it may be a smart financing solution, plus four large expenses you could address with a HELOC.
Why consider a HELOC?
A HELOC could give you access to thousands of dollars by letting you borrow against your home’s equity, which is your home’s value minus your mortgage balance. You may be able to borrow up to 80% of that equity and use the funds for nearly anything. A Hancock Whitney banker can explain how HELOCs work and why they may be a great financing option for your needs.
1. Using a HELOC for home improvements
As a homeowner, you know there’s always something that needs repairs — or that you’d love to improve. Whether you’re thinking about remodeling the kitchen, finishing the basement, revamping the landscaping, adding solar panels or installing a security system, a HELOC can give you a convenient way to pay.
A HELOC can be particularly useful when you need to make multiple payments or want to complete several projects, since you can make withdrawals as you need them. And, as you pay down your balance, funds are available to use again. Plus, you pay interest only on what you withdraw — and the interest may be tax-deductible when the money is used for home improvement (consult your tax advisor for details).
2. Paying medical expenses with a HELOC
Even with good health insurance, medical and dental expenses can put a big dent in your budget — whether you’re facing bills from an unexpected illness or injury, or paying deductibles and co-insurance for planned procedures. A HELOC can give you a way to cover these costs now while paying off your balance over time at a low interest rate.
A HELOC can also help when insurance doesn’t cover a procedure (such as a cosmetic treatment) or when you need care before a new insurance policy kicks in. Plus, you can use your HELOC to pay for health care for yourself, your children, your aging parents — even your pets!
3. Using a HELOC for education expenses
There are many options when it comes to helping pay for college costs, from 529 savings plans, to federal loans and grants, to financial aid from the school. But if you still have gaps in funding, a HELOC can help.
The interest rates for a HELOC are often lower than for private student loans, and you may be able to make interest-only payments during the draw period. Plus, you can use your HELOC for any type of education expense — including private school tuition, uniforms, textbooks and extra-curricular activity fees.
4. Consolidating bills with a HELOC
If you carry a balance on multiple credit cards and perhaps other types of borrowing, it can be challenging to keep track of the various payment amounts and due dates. You can use a HELOC to pay off those debts, giving you just one monthly bill and one due date, so it’s easier to pay on time every time. Even better, HELOCs typically have a lower interest rate than credit cards and many other types of financing. That means consolidating could lower your monthly payment and potentially lead to less interest charges over time.
Is a HELOC right for your needs?
A HELOC can give you a convenient financing tool to help pay for many things. But it isn’t right for every use. To discover more smart ways to use a HELOC, read this Insights article. To review the specific features and benefits of a Hancock Whitney HELOC click here.
Most importantly, you can talk with our team to learn more about HELOCs and other financing solutions — so you can find the right one to meet your needs. Visit a financial center, contact us by phone or email, or use our simple online tool to get personalized recommendations. If you’re ready to apply, you can start here!
Important Information for Texas Residents: Texas laws impose certain restrictions on lines secured by a lien on your home. In Texas, each individual advance from your line of credit must be in an amount of at least $4,000. The maximum amount of your new home equity line, when combined with the dollar amount of all other liens on your home, may not exceed 80% of the fair market value of your home on the date your home equity line is made. Only one home equity line is allowed on the home at a time and no more than one home equity line may be made on the home within a 12-calendar month period. Other restrictions apply. See a banker for details.
Overdraft option and check access not available in Texas.
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