Putting Your Home Equity To Work for You With a Home Equity Loan

Motor City Car Guy

When you have equity in your home, you can let it sit there. Or you can put it to use. The choice is yours.

One way to take advantage of the equity in your home is to take out a home equity loan. With a home equity loan, you are borrowing against the equity that you currently have in your home. However, you will receive that equity in cash immediately instead of waiting until you sell your home to gain access to the equity.

You can use the money you receive from a home equity loan for almost anything. According to U.S. News & World Report experts, some common things people use their home equity proceeds for are making home improvements, paying off credit cards, purchasing a rental property, paying for a child's college, and emergency expenses.

However, there are a few things to keep in mind before using your home equity loan funds to pay for any of these more common expenditures.

First, ensure that the interest rate and fees of the home equity loan make using your home equity loan funds a reasonable option; sometimes, there are more competitive ways to finance an expense, such as student loans.

Next, keep in mind that your home is securing the proceeds from a home equity loan. So, credit card debt currently unsecured will become a debt now secured by your home. That may not be something that you want to do.

Other expenses that may be riskier to spend your home equity loan on include the stock market, gambling, cryptocurrency, a vacation, and loans to friends and family.

Whatever you choose to do with the equity in your home, it's best to stay informed and make a knowledgeable decision.

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