Ask The Lender – Renovate Smarter With A HELOC

How does a home equity line of credit (HELOC) work?

A HELOC is a revolving line of credit that can help you utilize the equity built up in your home. Let’s say you bought your home 10 years ago and you’ve paid it down. Home prices have gone up in the last several years, so you are able to borrow against the amount that the home is currently worth. The thing I love about a HELOC is that, because it’s a revolving line of credit, you can borrow, repay, and borrow again as needed; Ideal for ongoing or future home improvement projects.

What makes a HELOC a good option for homeowners looking to finance renovations or improvements?

Compared to traditional loans or credit cards, HELOCs typically offer more competitive interest rates. This can make them a cost-effective option for financing major upgrades or renovations.

Are there certain home improvement projects that tend to offer a better return on investment when it comes to increasing home value?

Yes, projects that we’ve seen help increase a home’s value are kitchen or bathroom renovations. In general, updates that have broad appeal, rather than personalized touches, tend to provide a better return on investment when it’s time to sell.

For homeowners who might be planning to sell in the next few years, how can tapping into their equity now help them maximize their home’s selling price later?

If you were to tap into your home’s equity now, that would be a great opportunity to increase the value of your home. For example, if you’re considering selling your home in a few years, renovations can help you sell for a better price than if you had left it as is.

Are there any qualifications people should be aware of before applying?

There are some credit qualifications and other considerations to look at before applying. One of the most important ones is, “Do you have equity built up in your home?” People don’t always realize what that number may or may not be. If you have any questions about this, we are always happy to run the numbers to help you estimate before moving on to the application process.

What advice would you give to a homeowner who’s considering using a HELOC for their first major home project?

Start with a conversation. Visiting one of our offices gives you the chance to ask questions, understand your options, and create a plan that supports your goals. We’re here to help, whether you’re planning your home improvement project or exploring ways to build long-term value in your home.