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How you can use your Home Equity Loan

A home equity loan is an attractive line of credit for borrowers who want to upgrade their home or property, invest in their education or business, or consolidate high-interest debt. This loan program can improve your financial situation—and your future—and offers the bonus benefit of tax-deductible mortgage interest. Consider how Ahmad used his MortgageEase home equity loan to reduce his tax liability and create a more secure future.

Building for the Future

A 44-year-old carpenter, Ahmad has a reputation as a skilled craftsman, with plenty of work to comfortably support himself and his daughter. But like many self-employed craftsmen, he has little saved for retirement beyond the income generated from two rental properties and the equity in his own home, acquired over 15 years of his 20-year mortgage.

With a $30,000 home equity loan, Ahmad upgraded his kitchen and built an attractive workshop and storage area on his home property. This smart move increased the property value and reduced Ahmad’s business overhead by 18%. The mortgage interest is bettering Ahmad’s tax situation, and he’s investing the savings into a retirement fund. In addition, he’s made improvements to his rental property and as a result, nets a higher return. He has set aside this income for his daughter’s educational expenses. 

As Ahmad’s story demonstrates, a home equity loan is best invested in secure growth, home appreciation and the development of comparable assets for now and the future. When a home equity loan finances luxury items such as cars or boats or impulsive lifestyle choices, it becomes debt that puts your home at risk with little else to show for it. 

What could you accomplish with your MortgageEase home equity loan?

Improve your home and its market value

Use a home equity loan for home repairs and upgrades that not only improve the market value, but deliver tax savings. Though your loan will reduce your equity, you’ll develop additional equity when your repairs and renovations increase your home’s value. Upgrade a bathroom or kitchen; give your house the new roof and curb appeal it desperately needs.

But make wise renovation decisions. New plumbing and a new roof will preserve your home’s existing value and add to it, while a pool or gazebo offer you little return on your equity investment. To learn more, Contact Us.

Eliminate, Consolidate & Manage Debt Wisely

Eliminate credit-card debt or other high-interest burdens with a home equity loan. And since the typical rate on a home equity loan is often as much as 10-12% less than the typical credit card interest rate, you'll pay less interest.

While credit-card interest isn’t tax-deductible, you can count on a home equity loan for tax savings. Most borrowers also find the simplified single payments a timesaver and good financial management tool—ease the bill-paying headache with one payment instead of 10—and worry less that a bill has slipped and become past due.

Multiple credit cards, along with the high-interest attached, can make it difficult to practice sound personal financial management. A home equity loan reduces, consolidates, simplifies and even eliminates debt; it can give you additional time to pay. But do plan lifestyle changes and action to ensure your home equity loan is the step needed to avoid poor financial decisions now, and in your future.

What might this mean to you?

Your credit cards are near maximum limit and the total debt has climbed to $20,000, a debt that carries an 18% interest rate. Your minimum payment is $300 but you’ve vowed to pay $450 monthly, hoping to reduce the high-interest load. At the current rate of payment, you’ll pay just over six years, costing you $13,045 in interest. With a home equity loan borrowed at 8%, your $450 a month eliminates the same debt in 4 years, 4 months and you’ll pay interest of $3,732, a $9,000 savings instead of the hefty credit-card burden. You’ll also realize an average tax savings of $750-$1,000.

So, a home equity loan could mean a lot to you! How much? Contact Us.

Invest in education

Invest in your future—or your child’s future.  Use a home equity loan to help with college, skill training or educational expenses. Here, your loan can serve as a tax-deductible investment if it results in a higher salary, employment opportunities and your children’s earning ability and self-sufficiency. If your family doesn’t qualify for government-assisted student loan programs, you may want to consider a home equity loan. Just Contact Us to learn more.

Yearning to invest or boost your business?

Because a home equity loan is flexible, it may sometimes be used to build a business or extend investments such as secondary real estate purchases or to develop a stock market portfolio. You and your MortgageEase consultant will want to ensure that your investment has the best chance of working for you. While your existing equity is secure, there’s no such guarantee that your investment will be. Contact Us to explore the possibilities.

Living large? Buying big?

Your MortgageEase consultant will advise you against using a home equity loan to pay for a new car, new boat, designer wardrobe or the cruise to the Caribbean. You never want to reduce your home’s value or use its valuable equity on purchases or lifestyle choices that depreciate, have no real value or don’t result in sound financial investments and decisions. But in some cases, the reduced interest and tax benefits of a home equity loan might mean your decision to pay off a car loan is a smart decision. Or you may have a medical or financial emergency and need the flexible financial benefits of a home equity loan.

Contact Us to see how a home equity loan can improve your financial situation.

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