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Home Equity Loans can be used for many different purposes. Among the most popular are:

1. Debt Consolidation. This is the most common use of a Home Equity Loan. By converting many bills into one, many homeowners use Home Equity Loans to get a handle on their credit card debt. You’ll pay a lower rate and a lower monthly payment, which can help you pay off your balances sooner or free up some cash every month for saving or investing. You can also deduct the interest, up to the allowable limits. Remember, this is not a license to run your credit cards to the limit again; avoid any additional debt until your Home Equity Loan is paid off.

2. Home Improvements. The next leading use of Home Equity Loans is for upgrading and repairing the home. This is a great idea only when the improvements you choose to make actually increase the resale value of your home. Kitchen and bathroom renovations are at the top of the list. Additions that blend in with your home and the neighborhood are also a good idea – just don’t overdo it!

3. Educating Your Children. This is another popular choice, due to skyrocketing college costs and income thresholds that keep more and more people from qualifying for need-based financial aid. You can also think of this as an investment toward your children’s eventual financial independence. Try to keep a balance between their educational needs and your retirement needs – both are important.

4. Other Big-Ticket Items. Tax-deductibility of the interest is a powerful reason to use a Home Equity Loan to buy a new car, RV, or boat. Keep in mind that the payments may go on long after the item has ceased to be useful.

5. Unforseen Expenses. Home Equity Loans can also provide you with peace of mind in the event of an expensive medical emergency. Be aware that following your return to health, your loan will have a life of its own.

Home Equity Loans can help you achieve many financial goals when used wisely. Never forget that your home is on the line if you are unable to make the payments. For additional information on whether a Home Equity Loan is right for you, call or stop by the credit union.

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