Using your home’s equity wisely with a home equity line of credit

This content is sponsored by PenFed

For many of us, our home is one of our most valuable assets. As you begin to pay off your mortgage, your equity — or the amount you own vs. the amount you owe — goes up, and you can borrow money against it. This can give you quick access to needed cash, but first, make sure you’re using the right home equity product for the right purpose.

Enter the HELOC

There are several ways to borrow money against your home, one of them being a Home Equity Line of Credit or HELOC. As with other loans, you secure a HELOC for a set amount of money. But unlike a loan, you don’t need to use it all at one time or for one purpose. Here are some popular uses for Home Equity Lines of Credit:

  1. College Expenses

A HELOC can help cover any gap that you might experience between full college costs and any student loans that you or your child might take out. For example, a HELOC could help cover the cost of books, supplies and fees or, for students who live off-campus, the cost of rent.

  1. Home Improvements

Home improvements are another common use for HELOC funds. The benefit of using a HELOC for home improvement is that you are putting the money back into the house, most likely improving its value and therefore, increasing your equity. However, to get the full benefit, be sure your improvements are ones that will transfer to the next owners — such as an updated bathroom or kitchen — rather than electronics or artwork.

  1. Debt Consolidation

Other uses for a HELOC include paying off debt. Because Home Equity Lines of Credit are commonly available at a lower interest rate than most credit cards, they can allow you to pay down high interest debt more quickly.

  1. Rainy Day Fund

Due to its flexible nature, a HELOC can be a good, low-interest emergency option to help insulate you against unexpected car or home repairs or medical bills.

  1. Vacations and “Toys”

While a HELOC can certainly be used for these fun purchases, you should only do so if you have a significant amount of equity in your home. Make sure you have a plan to make your payments in a timely manner.

To learn more about PenFed Home Equity Lines of Credit and other ways to leverage the value of your home, contact PenFed Credit Union at 1-800-970-7766 or visit

PenFed is federally insured by NCUA and an Equal Housing Lender.

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