HELOCs Are Your Ultimate Loan Option for Flexibility

Life comes at you fast and there are lots of things you pay for. 

And when big expenses arise, wouldn’t it be great to have a flexible financing option for everything? Think of something like a credit card – a line of credit with a great low rate. 

That’s where a home equity line of credit (HELOC) comes in. HELOCs are known for their flexibility and, in this article, we’ll tell you why.

What is a HELOC?

Just like a traditional home equity loan, you borrow against the equity in your home. But with a HELOC, you don’t borrow a set amount. 

Instead, you start with a credit limit based on the equity in your home, then borrow what you need, when you need it. This gives you the flexibility to use it to finance a variety of things or pay for certain expenses as they arise. 

How Does a HELOC Provide Flexibility? 

A HELOC provides flexibility in a number of ways. First, you can use it for many different things, like: 

• Home improvement projects
• Debt consolidation
• College education
• Medical expenses
• Business ventures
• Legal services
• Travel expenses
• And more

A HELOC also provides flexibility by letting you finance things when you don’t know the exact price up front, or when you want to make your purchases a little bit at a time. 

Let’s look at a home improvement project, for example. If you get a quote from a contractor and know the exact price of the project up front, you could finance it with a standard closed-end home equity loan. 

But what if you’re doing it yourself and other expenses arise as you go? 

You may not know the exact price of the project until you start purchasing your materials. Or maybe you want to make your home upgrades piece by piece instead of all at once. 

These are situations where a HELOC would be a better fit for you. 

A Safety Net for Your Safety Net

A HELOC can also provide flexibility when it comes to your emergency fund. 

You can use your HELOC in an emergency if you don’t have enough in your emergency savings. Or you can lessen the burden on your emergency fund and split unexpected costs between your HELOC and your savings. 

How Much Are HELOC Payments?

The amount you pay each month may vary depending on your lender. In most cases, your monthly payment will be a percentage of your balance. 

For example, here at Veridian, your monthly HELOC payment is either $50 or 1% of your balance, whichever is higher. 

See Our HELOC Rates

How Much Can You Borrow at One Time? 

To determine this, you’ll need to consider your credit limit and how much you can afford to pay each month. Then compare that with how your monthly payment is calculated by your lender. 

So, with a Veridian HELOC for example, if you can only afford to pay $100 per month, your balance shouldn’t go above $10,000. 

You should also consider that paying the minimum could lead to a very long repayment period. So, you may want to borrow an amount that you can pay off in a reasonable amount of time. What that timeframe looks like is up to you. 

Other Financing Options For You

While a HELOC is one of the most flexible financing options available, it is not always the right option. 

For purchases that you will be able to pay off in a short amount of time, a credit card may be your best option. Especially if you find a card with a low interest rate or a 0% interest offer. 

When purchasing a vehicle, an auto loan may have a lower rate than a HELOC. Or, if you don’t own a home or don’t have equity, you may be able to finance your purchases with a personal loan. 

You should also consider the total amount of interest over the life of the loan. Some loans will have lower monthly payments, but a longer repayment period. 

So, you’ll have more wiggle room in your budget each month but will end up paying more in the long run. Consider your personal financial situation when deciding between a HELOC or other loan types. 

Your Flexible Financing Solution

When it comes to financing large purchases, few loan options are more flexible than a HELOC. 

Click below for more information about home equity loans and HELOCs, or to learn more about our HELOC rates. 

Read More: What Is a HELOC More On Veridian HELOCs