4 Surprising ways HELOCs help homeowners reach their goals 

As many as 78% of Americans see homeownership as a defining characteristic of the American Dream, according to a recent report by Mynd, a tech-enabled real estate company.¹  

There are many benefits to homeownership, but the ability to use home equity to reach other financial goals is one that many homeowners may not have considered.  

It’s a significant resource, as United States homeowners have more than $30 billion in home equity². However, many homeowners might not know they can use a Home Equity Line of Credit (HELOC) to access those funds. 

Many people often compare a HELOC to a credit card, but there are several key differences. The primary distinction is that a HELOC is only available to creditworthy homeowners.  

Homeowners’ amount of available home equity reflects borrowing limits. While most people have credit cards without collateral requirements, a HELOC uses the home as collateral for the loan. 

Despite this difference, credit cards and HELOCs both: 

• Are assigned a preset credit limit 
• Available balance is revolving and can be reused when paid back during draw period 
• Have variable interest rates 

For example, an Elevations HELOC provides borrowers with easy access to their funds. The funds can be transferred to an ECU checking account, and the HELOC comes with check-writing ability. They can also use their funds with the Elevations Home Equity Visa Card.   

HELOC funds are often used to cover the costs of home improvement projects, such as room additions and kitchen remodels. The ECU Home Equity card can even add an extended warranty when used to purchase applicable appliances. Note that getting HELOC approval before starting a project is key to the project running smoothly. 

But, borrowers can do more than upgrade their home with equity funds. Here are four surprising ways HELOCs help homeowners reach their other financial goals.

1. Pay off high-interest rate debts. 

Double-digit interest rate credit cards make it difficult to tackle debt. Paying more than the minimum monthly payment can help reduce debt faster.  

Eligible borrowers can use a low-interest rate HELOC to consolidate debt and potentially save thousands in finance charges. These might include title loans, payday loans and private student loans.  

Since borrowers can use HELOC funds at their discretion, there are plenty of ways a HELOC can help simplify finances. 

2. Pay for education expenses. 

Financial aid often fails to cover the full cost of attending college. Private student loans are available at most colleges and universities through national lenders but are often associated with higher interest rates, credit checks and stringent cosigner requirements for student borrowers.  

A HELOC might be beneficial if financial aid fails to cover the full cost of attending college. Only use what you need each year and make payments on the amount borrowed. 

3. Pay off medical expenses. 

Out-of-pocket healthcare costs can quickly add up when unexpected illnesses or injuries occur. Some doctors and hospitals might agree to payment plans, while others require payment within 30 days or threaten collection activity. If medical bills are piling up, consider paying them off with a HELOC. As other medical expenses arise, use a low-interest rate HELOC to pay the balance. 

4. Buy an investment/vacation home. 

You can use the equity in your primary Front Range residence to buy another home. Borrowers will need to decide whether a new home loan or an equity loan is a better choice when considering the purchase of an additional property. Use a home equity loan calculator to help estimate the amount available to borrow against your primary residence. 

The bottom line 

Unlike credit cards, HELOCs offer homeowners a low-interest rate means of paying for a variety of expenses to help reach their financial goals. During the first 10 years of the HELOC, aka draw period, it’s possible to make interest-only payments on the amount borrowed.  

Learn more about the benefits of an Elevations HELOC by contacting us at 800.429.7626 or apply online today.* 

Explore more home lending topics: 

🌳Front Range landscaping tips to boost home value 
🏡 Home equity loan vs cash out refinance 
🤔 What is home equity lending? When do you use it?

*All offers of credit subject to credit, underwriting, approval and membership eligibility. All credit union rates, terms and programs are subject to change at any time. 

Sources 

1 “Mynd Consumer Insights Report,” 2022, Mynd, https://www.mynd.co/real-estate-market-consumer-insight-report. 

2 “Households; Owners’ Equity in Real Estate, Level ,” 2023, FRED Economic Data, St. Louis Fed, https://fred.stlouisfed.org/series/OEHRENWBSHNO