Using a Home Equity Line of Credit to Pay Off Student Debt A HELOC, in short, is a line of credit (similar to a credit card) where a home is used as collateral to borrow money against the house ( the home equity ) in order to consolidate debt , do renovations , or take a vacation .
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A home equity line of credit may be perfect if your expenses will be staggered over a period of time, such as your child’s college tuition or a larger-scale home improvement project that will take several months or years.
A Home Equity Line of Credit (HELOC – or sometimes referred to as just HEL) allows you to borrow against the value of your home. While that may sound promising, there are a number of considerations at play, including what you could be giving up in student loan benefits.
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Discover from EasyKnock the pros and cons around using a home equity line of credit, or HELOC to pay off student loans.
We use a HELOC for our student loan debt. at all times. Home equity lines of credit are not risky. People who spend money incorrectly are risky. We have all heard of people using a line of credit to buy a car, remodel their home, or take a vacation. If you plan on using a HELOC for that then, by all means, don’t ever take one out.
A home equity line of credit, also known as a HELOC, is a line of credit secured by your home that gives you a revolving credit line to use for large expenses or to consolidate higher-interest rate debt on other loans Footnote 1 such as credit cards. A HELOC often has a lower interest rate than some other common types of loans, and the interest may be tax deductible.
A home equity line of credit, or HELOC, gives borrowers a line of credit in which to draw funds from as needed. Think of a HELOC like using a credit card, where your lender determines a maximum loan amount and you can take out as much money as you need until you reach the limit.