A home equity loan can be a fantastic way to source extra funds with interest rates falling and home prices rising. Tapping into your home’s equity, or the positive difference between what is owed on a home and its current value, will give you the funds you need for some of those larger expenses. A home equity loan can provide homeowners with the funds they need for a home improvement project, to get their debt under control, pay for their college education, or to build an emergency fund.

1. Home improvements

One of the most popular uses for home equity is for home renovations and improvements. These can be as major as adding a 1,000-square-foot extension to your home, as minor as replacing old carpet with new hardwood flooring, or anything in between.

Using your home’s equity for home improvement projects is a smart choice for multiple reasons. For one, the money you put into the renovations acts as an investment. If you choose improvements that increase your home’s value, you could make back the money you spent or even see a return when you sell your home. Also, if you use the funds from a home equity loan to increase your home’s value, you may be able to deduct the interest paid on the loan from your taxes (be sure to consult with your tax adviser if you plan to go this route).

If you plan to use your home equity funds for home improvements, be sure to choose wisely. It’s best to go for improvements that add lasting value to your home instead of superficial remodeling projects.

2. Debt consolidation

Another popular use for a home equity loan is to consolidate high-interest debt. Paying off multiple debts at high interest rates can be cumbersome and difficult to manage. Worse, the heavy interest rates mean more of the borrower’s money goes toward the lender and less goes toward paying down the principal of the debts. Using a home equity loan to consolidate debt to a single, low-interest loan could slash a pile of debt by several thousands of dollars and help shorten repayment time by several years.

3. College education

With interest rates falling, funding a college education through a home equity loan instead of a high-interest student loan could be a smart choice. Similarly, homeowners struggling to meet their student debt payments without defaulting on the loan might want to use their home’s equity to pay off the debt quickly and replace it with a more manageable low-interest loan. It’s important to note that paying off a federal student loan with home equity might not be the best choice, as these loans are sometimes eligible for partial or complete forgiveness.

4. Emergency fund

Most of us know that financial experts recommend having three to six months’ worth of living expenses stashed in an emergency fund to be used if the need arises. But reality can keep this fund a distant dream for too many people. If you’ve been struggling to get your own emergency fund off the ground, tapping into your home’s equity can be a great way to get that boost you need. You’ll have a large stash of cash to build your fund, and the manageable payment plan will help ensure you still put money into savings each month. As a bonus, if you experience a financial emergency of any kind after taking out your home equity loan, you’ll already have the funds on hand to help pull you through.

If you’re ready to take out a home equity loan, look no further than Texans CU. Our rates and terms are always competitive. Give us a call at or stop by Texans CU to get started on your loan application today.

Home Equity Lending Options