Hello World! Welcome Friends! Homeownership usually starts with borrowing a large sum of money. This initial loan does not preclude the need to obtain additional funds as the years of ownership increase. Different circumstances arise that cannot be planned for that come with a weighty price tag. These unforeseen events can be discouraging at first. Budgets that don’t balance anymore can drive even the most even-keeled homeowner crazy with worry. This doesn’t need to be the case.
Homes are perfect resources to provide cash flow by using them as collateral and securing a line of credit. This process can be a clever way for homeowners to use the value of their home in active ways to allow them financial access to options that would be otherwise impossible.
Emergency Fund
The first, and perhaps, most responsible way that a line of credit can be used is to be the basis of an emergency fund. Many financial institutions and even governments make it a habit to suggest saving enough money to survive for at least one month if normal means of sustenance were to dry up. This is prudent advice and should be considered very carefully by those who receive it, but the value of the advice does not make it easy to follow.
Setting up an emergency fund almost always will require penny-pinching and austere budgeting practices. This means sacrificing some non-essential elements of your lifestyle. What can make this sacrifice feel feeble is the way in which the saved money is kept. Many savings accounts held by banks do not provide enough of a growth rate to protect against standard inflation. This means money that is set aside for an emergency will slowly lose its value over time.
This can be avoided by reducing the amount of hard cash that is deposited and relying instead on the value that your home has as a source of emergency money. Your house will always be there and should things become tight for one reason or another, a line of credit can be taken on the property and your problems can be handled, all without unnecessary saving practices.
Upgrade Your Home
Another clever way to use a line of credit is to reinvest your loan into the home itself. By the time that the average homeowner is able to pay off initial mortgages tied to the construction or purchase of a home, the style and even safety trends have changed. A forty-year mortgage as many years of hard work to pay for a place to live, hardworking homeowner deserves to spruce up the place at that time.
Obtaining just enough money through a loan of this type will ensure that your home can be appropriately updated without throwing off any month to month financial plans. This use of credit is especially popular with those who do not have any debt or other ‘sucking’ expenditures. This is because the value of the home lies dormant, and if there is nothing else to use it on it may as well be used in the structure itself. This can increase the comfort of the borrower/homeowner and can increase the value of the home should it even need to be sold.
Pay Off Debt
If you are one of the millions of Americans that are struggling with debt, the line of credit on your house can still be used to improve your situation. Debt consolidation is a frequently used strategy to manage high levels of debt but has the drawback that it often requires a large sum of money to pay off the various lenders all at once. This large sum can be had by using a line of credit loan.
Paying all of your debt off with the loan you get from the value of your house transfers your debt to a single lender. This makes it far easier to keep track of payment amounts and dates and can lock your debt into a lower, fixed rate of interest.
Invest In People’s Futures
Clever homeowners are always looking at the next financial hurdle to be overcome. One of the most pressing of these foreseeable hurdles is the cost of education. It is a terrible consequence of gaining an education to be buried under student loans. What can be worse is a prospective student looking to go to college working to pay their way through who is unable to devote themselves wholly to their studies and is unable to accomplish their desired degree. All of this could be avoided by parents, grandparents, or other concerned parties by giving that student access to the value that is tucked away in their home.
The high costs of homes mean that even things like pricey student tuition can be covered by a home line of credit. This financial trick can make the difference in someone’s life and is the kind of gift that the responsible homeowner is looking to give.
Pay For Medical Expenses
As people get older they tend to stay in their homes more. They are less likely to sell their house and the home then becomes a focal point for family activity and memories. The downside to living to see so many great memories is the medical conditions that arise due to age. If a serious medical emergency were to occur it can leave an individual or family grief stricken and with a huge medical bill. If there is no other way to pay for medical accidents the clever homeowner can help out by, once again, getting a loan by using their cherished home as collateral. Using the home to preserve family unity is a noble way to take care of life’s unforeseen moments.
Manage Your Credit Score
The last tip for clever homeowners is to take a line of credit out on their home to help bolster their credit score. There are many reasons that someone would want their score to improve. Obtaining a highly manageable loan of this type is one way to essentially prove that you are responsible for paying back money that is loaned to you.
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