One of the great perks of home ownership is equity. A HELOC is a Home Equity Line of Credit that uses the equity in your home. Your home equity is the difference between your home’s value and the balance of your mortgage. Typically, HELOCs have a competitive loan rate similar to that of a first mortgage. Don’t make the mistake of financing improvements by a credit card or by some other high interest means.
“A big benefit is flexibility – having access to funds when you need them and for how much you need,” says Travis Olsem, Assistant Vice President, Business Development at American Bank & Trust Sioux Falls . “Another benefit is you only pay interest when you use the line of credit. You can pay it off and advance it as many times as you need over the life of the loan.”
There are pros and cons to every loan product. This type of loan is a great way to make home improvements and potentially add value to your property. But you must use it responsibly. The more you take out, the more you’re putting yourself at risk because you are using your home as collateral. American Bank & Trust has a few recommendations to put your HELOC to work for you.
Renovate Your Kitchen
Maybe your kitchen is a bit dated. Or, it’s just not the space you require. A kitchen renovation is one way to use your HELOC. Much is made about kitchen renovations adding value to a home. They certainly hold appeal to potential buyers. But American Bank & Trust knows market conditions fluctuate. So if you renovate, make sure you’re doing it for yourself.
We recommend using good judgment in your planning. Don’t go overboard. Pick an area or two where you really need to make updates, for example, cupboards or countertops. It’s easy to fall into the impulse of “Now that we did this, we have to do that.” It’s a trap. Just because a HELOC has a favorable interest rate, don’t be irresponsible in your spending.
Do your research and look for sales on materials. Also, take advantage of rebates and incentives on energy saving appliances. This can help you save a few bucks on your purchase, and thousands over time on energy bills.
No matter how you tackle your kitchen renovation, think function. Even if you plan on one day selling your family home, it needs to be livable for you.
Improve Your Curb Appeal
Improving your curb appeal adds value too. But it’s also a fun way to freshen up your space. It doesn’t have to cost a lot and a HELOC loan is a great way to fund your efforts.
There are simple, quick things you can do to make instant improvements:
- Change out your house numbers
- Stain your garage door
- Paint your front door
- Upgrade your mailbox
Adding greens to the front of your home is where you can spend a little more. Fresh greenery and flowers can really make your home pop. Even adding planters and window boxes makes a big difference. So, if you’re not ready to rip up an expansive plot of property for a super garden, start small.
No matter what you do, designers recommend adding symmetry. Straight lines are pleasing. Plants around entrance points draw focus to key visuals. And should you decide to sell your house? A well landscaped front yard and entrance tells buyers you’ve taken care of the home.
Build Yourself a “She Shed”
American Bank & Trust has funded a few man caves in our time. Why should all that fun be reserved for just men? Build yourself a “She Shed.” A HELOC is a great way to add that sewing room, crafting room, or backyard escape for whatever your passion is.
Use your HELOC to clean out and clean up an existing shed. Or use it to by the prefab kind you can get at most box stores. Then outfit it with special touches that make sense, a small corner couch or pretty overhead light. If you choose to sell your home, your buyer doesn’t need to share your hobby. They just need to be able to picture themselves in a comfy space.
In a market where a lot of listed homes are similar, the She Shed can make the difference. And by the way, American Bank & Trust still funds man caves too!
A HELOC is a great way to master your money and pay for improvements you need. Ask American Bank & Trust how.