You’ve purchased a home in your dream neighborhood and you're slowly but surely fixing it up to make it absolutely perfect. Perhaps you’re adding a deck, pool, or doing a kitchen remodel. All of these things can impact your budget, so how will you pay for them? Perhaps a home equity line of credit (HELOC) is a way to check some things off your list and make your home perfect.

HELOC Home Equity Line of Credit Pros & Cons

A HELOC with the approved loan amount operates like a credit card. For example, if approved for a HELOC of $10,000, someone can make several purchases, pay down the balance and continue to make purchases, as long as they remain under the loan limit. These loans generally have an adjustable-rate and their interest payments are tax-deductible. Many HELOCs are also second mortgages, but they do not have to be - they can be used to refinance your existing mortgage, or could be your first mortgage if you no longer have one on your home.

HELOC Pros

1. Your credit card likely has a rate upwards of 15%. Depending on your credit and the value of your home, a HELOC would have a far lower interest rate, sometimes in the area of 4-6%. If you need to access cash, you’ll want to do it as affordably as possible, and second mortgages offer that. Learn more about Metro’s current HELOC promotion.
2. Things are expensive, and they’re not getting any less expensive. Whether it is college, home renovations, or your triplet daughters all getting married at the same time, a HELOC allows you to purchase things that you would not ordinarily be able to afford.
3. Using that HELOC for renovations? Great! Renovation work done well can increase the value of your home.  At the end of the day, you may end up breaking even on the cost of the HELOC and interest versus the value you’ve gained in your house.

HELOC Cons

1. A HELOC isn’t free, and there may be fees such as a home appraisal. These amounts are rolled into your HELOC so you won’t have to pay them all upfront.
2. HELOC’s place what, for many Americans, is their most important asset at risk: their home. Be absolutely certain that you can pay the HELOC back and still live comfortably (with an emergency fund!).

Metro Credit Union in Omaha, Nebraska

Learn more about HELOC’s on Metro Credit Union’s free Save and Succeed financial resource, then give us a call at 402-551-3052 and be thrilled at just how low your payment can be. Our Personal Bankers can find the home equity loan that's right for you and give you quotes on current interest rates and closing costs. It may be hard to choose the right tile for your new bathroom or right cabinets for your kitchen, but finding the right HELOC lender is easy. We are your local advantage. You can also click here for more information.