I was in a bad accident in which a portion of my body had been seriously burned. It was going to take a couple years of treatment and therapy in order for the skin to heal and new skin to be grafted in place. This all happened before I had any health insurance and sadly the medical costs were enough to possibly bankrupt me. I needed an avenue to help ease the financial burden so I could continue with my life and my recovery without any setbacks. My credit score wasn’t bad, but it wasn’t great either, so taking out a loan that could cover the costs associated was probably not going to work. That was until I was introduced to the possibilities of home equity lines of credit.
- If you have been paying a mortgage you have been building up equity over time. This money is technically still yours.
- A heloc loan is a loan against this equity. As you pay off the balance the amount of available credit on heloc loans increases!
- The best part is that this money is tax deductible and you can spend it however you wish.
- The risk is that you are borrowing against the amount of ownership you have built up in your home, so if you default on either the mortgage or the new loan you will lose your home.
Facing things head on
I sat down with my lender and discussed the problems I was having. They held a sympathetic ear to my plight, but they also had to protect their own business. Initially we discussed the possibilities of foreclosure and how it needed to be avoided at all costs. Neither of us wanted that outcome, however it was becoming more and more likely with every bill I was receiving from the hospital for my treatments. I didn’t really need a lump sum of money that I’d have to pay off in a year, although that was another option with my equity. What I needed was the ability to tap into my equity over many months in order to keep up with the hospital bills. The lender suggested taking out a line of credit against my home. Essentially it was a second mortgage and there were inherent risks involved, however I was in no danger of losing my job and the lending company felt comfortable allowing me to take on that risk.
How equity worked for me
Every other month I would go in for my treatments and receive a sizeable medical bill. I would then contact my mortgage lender and receive my money to help pay for these bills. At the end of the year I could write off these payments from my taxes. Home equity can be used for just about anything. Since this time I’ve seen my neighbors use equity to make additions and “green” improvements on their home. The solar panels which now sit on their roof have afforded them some tax breaks too along with the energy savings. I heard of another family that put their child through college using a home equity line of credit over several years.
Eventually the loan has a lifetime and you will have to pay it back at the agreed upon moment. However these deals are often negotiable and can be extended in certain circumstances. The key with any mortgage is to develop a great relationship with your lender. Visit www.real-estate-yogi.com and ask them “what is a heloc loan, and how can I acquire one?” They are experts on these topics and can help guide you through all of your real estate ventures. Call them at 1-800-987-1397.