Smart Uses For A Home Equity Loan

Posted on: 27 November 2015

Getting a home equity loan can be a smart move under the right circumstances. Of course, you need to use this option carefully since you will be putting your home at some risk by getting one. You want to protect your home as much as possible, and it will be functioning as collateral for the loan. As long as you get the loan for the right reasons, taking one out can be a responsible decision.

Home Improvements

One of the best reasons for taking out a home equity loan is to make home improvements. You should choose improvements that will add to the value of your home, however. Kitchens and bathrooms are usually the best choices for a remodel since home buyers are most interested in those two rooms. Also, additions to your home can pay off in some circumstances. Still, you must be certain that your home can sell at a high enough price to cover your remaining mortgage and your equity loan. You do not want to be "upside down" on your home.


Using your home equity loan to invest in the stock market comes with some risk, but such a choice can work for you as long as interest rates stay low. You might also consider using the money to invest in a business or other personal endeavor. Again, these moves come with some financial exposure so consulting a financial adviser before you take out your loan is a good idea. First and foremost, you want to protect your home ownership.


If you do not have a savings account that can handle big emergencies, such as medical bills or large home repair bills, having a home equity line of credit available can be a good idea. Of course, not everyone can resist using available funds for non-essential items such as vacations. If you don't have control over your spending, do not set up an equity line. If you can exercise control, however, having this emergency fund can give you a real sense of security.

Home equity loans can be lifesavers when you need cash for home repairs or remodels. You may also use them for serious personal reasons such as educational funds or family emergencies. You can over-extend yourself with these loans if you are not careful. However, using these funds responsibly can improve the quality of your life. Seek out the advice of a reputable financial counselor before you take action. Consider contacting the professionals at Union State Bank for more information. Under the right conditions, a home equity loan may be the right thing for you to pursue.