5 Ways To Use a Home Equity Loan

If you've lived in your home for some time and been dutifully paying off your mortgage for years, the odds are good that you've accrued significant equity. There are many benefits to having some extra home equity, and if you don't plan to move any time soon, you can put that financial flexibility to good use.

A home equity loan allows you to get a lump-sum payout from a lender against everything you've built up over the years, and there are a lot of ways you can put those extra funds to good use. The following are some of the best examples:

1) Cover the cost of improving your home

This is a great idea, especially if you live in an older house, because it simultaneously increases your home's functionality and value , according to Bankrate. If, for instance, you get a home equity loan worth $20,000, that can go a long way toward upgrading your kitchen or master bathroom, or otherwise just doing some much-needed structural work for your home. Then, when the time to sell does come, you've done that much extra work to make your home highly marketable.

A home equity loan can set you up for financial success, and has a lot of potential uses.

2) Boost a college fund

If your kids are rapidly approaching the age at which they'll head off to college, or are already there, you'll probably want to set aside as much money as you can to ward off long-term, potentially high-cost student loan issues. With a home equity loan, you can either set that money aside for future use, or use it to pay existing tuition balances now.

3) Pay off other balances

If you have a lot of debt besides your mortgage (whether it's credit card balances, student loans, auto financing or anything else, you may find that high interest rates are putting you in a tight spot. Investopedia notes that if you get a huge lump sum from home equity, you can pay off those high-interest balances in one fell swoop and bring all that debt into a much lower-rate loan that helps you save significantly in the long run.

4) Fund a business venture

If you're interested in starting a business or already have one, you may want to use home equity to give that company an extra shot in the arm. You can use that money to strategically set yourself up for long-term success if you properly identify areas where you can make improvements.

5) Put it away for a rainy day

Finally, there's nothing wrong with getting a home equity loan that allows you to build (or rebuild) your emergency savings , The Huffington Post says. If you've been rocked by unexpected bills in the past — such as medical bills — or want to insulate yourself against that risk, tapping home equity can be a good way to go about it.

If you're interested in a home equity loan, home equity line of credit or even just a refinance of your existing mortgage*, get in touch with the local representatives at Vectra Bank today. We can walk you through all your options and set you up for financial success.

^{*Loans subject to credit approval. Terms and conditions apply. See banker for details}