What Are the Most Common Reasons to Use a HELOC?

A HELOC can be extremely useful when you need to make repairs or improvements to a home, or to add value to the property through other means. If you use a HELOC to increase the value of your home, you will improve your chances of coming out ahead when you eventually sell your house and complete repayment on the HELOC.

Homeowners use HELOCs for many other reasons as well, often related to paying off debts or other personal costs. Some additional uses for a HELOC include:

• Paying college tuition bills

• Purchasing a car (or other costly asset)

• Paying off other, higher-interest debts, such as credit card bills

• Paying bills during an emergency, after job loss, or when income otherwise decreases below expenses

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You should avoid taking out a HELOC just to get more cash for day-to-day needs. If you are having to borrow money to pay to meet basic requirements, you are living beyond your means and should address the costs that have contributed to making your lifestyle unsustainable. Instead of a HELOC, find other ways to reduce costs or to bring in extra income.