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Making Your Money Work for You with a Home Equity Loan or Line of Credit

Home Equity Loans and Lines of Credit are a great form of financing and are a great way to secure financing for big projects around the home. Taking advantage of the value you have in your home is a great way to investment in improvements that will add value to your home. It’s a way to make your money work for you!

When you take out a Home Equity Loan or Line of Credit, a lender is extending funds to you based on the security assured by the value you have built in your home. You have worked hard and saved for years to buy your home, so the lender feels fairly certain that you will pay any amount taken out against your property. The goal is then simply to try to direct your energy towards an endeavor that will generate more returns than the relatively low rate afforded by a Home Equity Loan. Undoubtedly, there are certain projects that will add more value to your home than others, so we’ll focus on projects that make sense from an investment point of view.

The return you realize can come in the form of a stream of revenue, cost savings from improvements or an increase in the value of your home from additions. For example, investing some money into finishing a basement or adding on an addition with more space could be a great use of a Home Equity Loan. Alternatively, you could invest in something like solar energy, which over the life of the panels could end up saving you more than it costs you. This has the added benefit of being both good for the planet and possibly for the price of your house as it might be a selling point for potential buyers. Additions which make the house stand out such as patios and pools can also pay off big when it comes time to sell and will bring joy to the family in the meantime. The key thing to keep in mind is that these should be things that are perceived as valuable by more than just you and should be functional.

Clearly these are oversimplifications of making investment decision, but you can begin to see the ways in which you can make the value of your home work for you. Before making any decision, you should speak with a financial professional about the tax and legal implications of any investment as well as the risks and rewards associated with them. When you are ready to explore financing options for your investment, be sure to speak with a specialist from Mechanics Cooperative Bank about our home equity lending options with convenient terms and competitive rates!

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