3 Ways You Can Maximize Your Home Equity Loan

max-i-mize [verb] : 1. to increase to the greatest possible amount or degree
2. to represent at the highest possible estimate; magnify
3. to make the greatest or fullest use of.

Your home is your greatest asset, and you can maximize that asset by tapping into its equity with a home equity loan. But you already knew that. It is not enough, however, to maximize your home’s (real estate) equity if you do not maximize your home equity loan. Here are three ways that you can get the most out of your home equity loan and make your home work to its greatest potential for you:

1. Find a loan with the fewest fees. When consumers shop for a home equity loan they focus on mortgage rates and monthly payments. These are important, but in the process they tend to overlook the fees that also come with the loan. Common fees associated with home equity loans include application fees, points, closing costs, and pre-payment penalties. So be sure you do your research and compare all the pricing elements for home equity loans .

2. Make sure the interest is tax deductible. In most cases, the interest that you pay on a home equity loan can be tax-deductible. You should always consult your tax advisor and find out if you can take advantage of an offer like this.

3. Use it to finance something that will increase in value. You can use a home equity loan to finance just about anything. You can pay off credit card debt, or you can buy a car. But the way to really get the most out of it is to pay for something that will increase in value, such as home improvements or college tuition. Most home improvements can add more value to your home. When you use your home’s to fund a project like this, you are, in a way, giving the money back to yourself. Similarly, when you put money into a college education, either for your child or yourself, it is the type of investment that will increase in value and be able to pay itself off in the future.

In order to truly maximize your home’s equity, you need to shop wisely, ask the right questions, and make sure you are getting the best home equity loan available. If you follow these three tips, you will be well on your way to getting the most out of, or maximizing, your home equity loan.

Source: Informa Research Services