The Jarrettsville Federal Blog

17

by Gary Barnoff

Even though there’s still a few weeks left of summer, many thoughts are turning toward back-to-school.  This time of year has its share of expenses -- not just binders, pencil cases, lunch boxes and back packs, but also bigger expenses like books, school tuition, apartment costs for young college-bound students and everything it takes to furnish said apartments.  It’s a never-ending cycle and it presents financial challenges for many families. 

While college-bound students may have their financial aid packages tied up with a bow, there’s still the matter of the family’s “share” of the expenses that often are required in a lump sum at the beginning of the term.  The same holds true for families who are sending their children to private elementary or secondary schools.   The purchase of a used car for an after-school job, the necessary funds for sporting equipment, uniforms, shoes and team expenses may require a sum of money that is outside of a family’s regular monthly budget.  A home equity line of credit may help.

Different from a home equity loan, the home equity line of credit (HELOC) is a credit line that uses the equity you already have in your home – or the portion you’ve already paid off – as collateral to guarantee loan payback.  Your credit limit depends on the amount of equity in your home.  Why take out a HELOC instead of using a credit card?   Flexibility.  You can go back to a HELOC and draw money from it continuously, as long as you don’t exceed your maximum credit amount and you’ve consistently made your monthly payments.  Interest rates, though they may be adjustable, are lower than credit cards.  You can work with your lender to create a payment plan that is right for you. 

A home equity loan provides the money in one lump sum and you begin making monthly payments immediately.  Talk to an experienced loan advisor to help you decide what’s best for your needs.  Go back to school prepared.

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