Valentine’s Day can be a lovely occasion to do something small or extravagant for your partner or a nice time for single people to do something with friends. You don’t need to break the bank on a romantic gesture or outing; just doing something thoughtful is more than enough.
Some regard it as another arbitrary Hallmark holiday that pressures people into spending money they’d rather save on indulgences. Homeowners may be struggling to make their monthly mortgage payments given the rising costs of interest and other staples, like groceries.
The valentine’s season is upon us, and if homeowners want to treat themselves, they can consider leveraging their home’s equity to stabilize their finances.
Let’s take a closer look at how a home equity loan might be the right tool to do just that.
What is a Home Equity Loan?
First, the basics. A home equity loan allows homeowners to tap into the equity they’ve built to date with mortgage payments and leverage this to get better borrowing terms. Essentially, the mortgage payments are a percentage of homeownership you leverage to get lower interest rates on borrowed money.
The home equity loan is determined by the value of the property, which gets assessed by an independent inspector from the lending institution. The longer you’ve owned your home, the more equity you have, which means you get more generous terms.
Why Home Equity Loans Can Be Excellent
A home equity loan is one of the surest ways to get low rates on the money you borrow. There’s almost no more valuable form of equity than property, so lenders feel reassured when someone uses theirs as a stake.
Home equity loans also tend to get very quick approval for the same reason, meaning people can get substantial amounts of cash right when they need it. If your roof is leaking or there’s a flood in the basement, the last thing you’ll want to do is jump through hoops trying to get a loan approved.
Home equity loans can also be fantastic ways to consolidate multiple debts to improve your credit and financial health.
Take Caution
If you get a home equity loan from Burke Financial, these financial experts will advise you on all the positives and potential negatives. They will surely stress that homeowners are free to use the money any way they please! Some take out a home equity loan to fund things like a vacation or a new car.
However, the failure to repay a home equity loan has high consequences and could involve losing your home. Most experts recommend reinvesting the money into your home for things like renovation or emergency repair. Investing in the asset you’re borrowing against can raise its value, and if you do it right, this could pay for the borrowing costs and even net you a tidy profit.
There’s a big difference between a nice candlelit dinner with a loved one and tapping into your home equity to stabilize and improve your finances, but this valentine’s day, treat yourself in whatever way feels right.
