mom and daughter dancing on the hardwood floor of their remodeled kitchen, thanks to a Gate City Bank home equity loan

7 Ways to Use a Home Equity Loan: 
The Floor Is Yours.

Make your move! From home renovations to dream vacations, here are seven different ways to use a home equity loan for some of life’s biggest moments – without missing a beat.

How Does a Home Equity Loan Work?

Tapping into your home’s equity can be a smart way to transform your house into your dream home or pay for large expenses.  

But first things first: what exactly is home equity? In a nutshell, it’s the difference between what your home is worth and how much is still owed on your mortgage. As your home’s value increases over time and you pay down the principal, your equity will continue to grow.      

While situations may vary, some lenders will let you borrow up to 90% of your home’s current value.

The Advantages of Home Equity Loans.

So what makes a home equity loan different?

  • Lower fixed interest rates
    The interest rate for a home equity loan is often lower than most credit cards and other types of loans. And since your rate will never rise, your monthly payment will always be predictable – making it easier to stick to your budget without any surprises. See current home equity loan rates.

  • Cash when you need it
    With a home equity loan, you can pay for that big purchase little by little.

  • Possible tax deductions
    Oh, and if you’re using your loan to make improvements to your home, you may be able to deduct the interest when tax time comes around. Just be sure to consult your tax advisor to confirm.

How to Use a Home Equity Loan:

From tackling a renovation to finally taking that dream vacation, here are seven reasons that you may want to tap into your home’s equity.

  1. Make home repairs and renovations.

    giggling blonde girl taking a bubble bath in a soaker tub in her family's newly remodeled master bathroomYou guessed it! Maybe you’ve always wanted a chef’s kitchen. It’s finally time to finish the basement. Or maybe you’d love to put in a fence or remodel the bathroom with a walk-in shower. Whatever’s on your list, a home equity loan can be a smart way to increase the value of your home.

    Whether you’re replacing flooring or reimagining your master bath, you and your family can relax and enjoy soaking up those improvements to your living space, too.

Pro Tip:

If you plan on tackling ongoing projects rather than one big renovation, a revolving home equity line of credit (HELOC) is a more flexible way to cover a variety of expenses over time. Ask your lender what’s the best fit for you!

  1. Consolidate credit card debt.

    Have credit card debt or other loans with a high interest rate? Consider consolidating those debts into a home equity loan. It can simplify and streamline your finances with a single, easy payment. Not to mention, it may be able to save you hundreds – or even thousands – in interest.

Pro Tip:

Curious how much you could save by consolidating multiple credit cards or loans? Use our handy calculator to compare the numbers and estimate your monthly payment!

Try our debt consolidation calculator

  1. Pay for that fairy-tale wedding.

    Sometimes a large one-time expense can be difficult to cover with savings alone.

    And when it comes to weddings in particular, that once-in-a-lifetime day can come with a big price tag. In fact, the 2022 average cost of a wedding was $20,000 in North Dakota and $25,000 in Minnesota. A home equity loan can be an affordable option to fund that fairy-tale day and still stick to your wedding budget.

  2. Stop putting off your dream vacation.

    Relaxed middle-aged couple on their dream vacation, holding hands and hiking through the mountainsSometimes we all need a little reminder: life is short.

    Maybe you’ve always wanted to take a two-week trip exploring the beauty of New Zealand. Tour Scotland and Ireland with your family. Or soak up the sunshine with a few long-time friends at an all-inclusive resort in the Bahamas.

    When it’s finally time for that getaway of a lifetime, it could have a hefty price. Tapping into your home’s equity may be a simple way to foot the bill – complete with a low interest rate.

  3. Help pay for college.

    When student loans aren’t available – or simply aren’t enough – a home equity loan may be another solution to help cover college expenses for you or your loved ones.

Pro Tip:

The first and only program of its kind in the nation, our BetterLife™ Student Loan is another way to consolidate student loan debt with no fees and low fixed rates. The process is simple, and it saves our customers about $10,100 on average in interest.

  1. Invest in continuing education.

    Start by asking your employer if they offer financial assistance for furthering your education and training. If assistance isn’t available, a home equity loan may be a useful option if you want to increase your earning potential through career development courses, bootcamps or advanced degrees – without having to dip into your savings.

  2. Cover business-related expenses.

    Using a home equity loan to grow your business or start a new enterprise can pay off, if handled responsibly. Before you commit, be sure to run the numbers. Carefully evaluate your business plan, and keep the overall health of your business in mind.

    You may want to talk to your lender about a variety of different business options, such as equipment, term and real estate loans, too!

Take the Next Step!

Have any other questions about home equity loans? Just ask! At Gate City Bank, we’ll listen and help you understand your different options with local financing – personalized for you, your home and your wish list. From that kitchen renovation to your long-awaited vacation, let us know how we can help!

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