When (& Why) a HELOC is a Good Idea

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If you have been following our series of posts on Home Equity Lines of Credit, you know there are a lot of ways that HELOCs can help people achieve their financial goals. However, the decision that varies from person to person; it’s up to you to determine if a HELOC is a good idea for you. To wrap up this series, here are all the things you should consider when deciding if a HELOC is the right financial decision for your situation.

When Getting A HELOC Makes Sense

Paying off higher interest debt

Taking advantage of a HELOC to reduce the amount of debt that you owe can greatly lower the total interest that you’ll pay over time, as well as potentially freeing up extra cash to add some flexibility in your monthly spending plan. We had a little more to say about using a HELOC for debt consolidation when we talked about it in February.

Making home improvements and repairs

With all this extra time at home, you may have noticed a few repairs you might be in need of. Or maybe those improvements you’ve been putting off are now top of mind. Taking advantage of a home equity line of credit can make those home improvement projects possible. With flexible loan terms and quick access to your funds when you need them, a HELOC can be a great idea for this purpose. We talked a little more about using home equity for more improvement in December.

Paying for college

Kids off to college or  heading back to school yourself? A home equity line of credit might be a good idea in offsetting the expenses of higher education. A HELOC can give you peace of mind knowing that the cost of college can be covered without the accumulating interest that often lingers with traditional student loan options. Our April post on using home equity for college costs went a little deeper on this topic.


One thing we all can relate to is the cost of an unexpected expense. An emergency can present itself in many ways financially. But the impact on our budget doesn’t always have to be felt with such force. Utilizing the equity in your home as a nest egg for the unforeseen life events will not only prepare you financially for an emergency, but also offer the added benefit of knowing your covered.

When Getting A HELOC Might Not Make Sense


Everybody would love to take a dream vacation; however, using the equity in your home for vacation expenses may not be of the wisest decision financially. A HELOC in this scenario offers a number of unknown risks that can occur with the nature of vacation trips. Unexpected weather and last minute cancelations are just two ways in which your vacation can be derailed, often with associated fees.

Buying a Car

With competitive rates and flexible monthly payments, taking advantage of a HELOC to purchase a vehicle might seem like a great idea. However, there are some reasons why you might want to think twice. Purchasing a car can be a mid to long-term purchase which is why auto loan terms are typically between 3 to 7 years. Given the nature of vehicle depreciation and the possibility of needing to be replaced sooner than expected, it’s not the best idea to finance this type of purchase with the equity in your home.

Potential Concerns Associated With HELOCs

Using your home as collateral

Utilizing their home as collateral can gives some people pause when they’re not aware of how a HELOC works. With so many different types of mortgage and equity products available, you will want to ensure of getting the right type of loan that works best for you and your financial goals. Prior to making a decision, our team of mortgage specialists are here to help you evaluate your options so you can be confident that you’re making the best choice for your plans.

Changing home values

With the housing market booming, you might be wondering how the value of your home ties into the available equity in your home. At Call Federal, our HELOCs typically do not require a full appraisal; in addition, we have a great team to help you evaluate the potential equity available to you.


When we think of a mortgage product, many of us will immediately wonder about the “out-of-pocket” costs. While traditional mortgages have associated fees that can really rack up fast, our HELOC products have low fees with the flexibility to finance within the loan. This can not only create savings for you, but also reduce the amount of cash you have to bring to the table.

There are many factors that should be considered to determine if a HELOC is a good idea for you. If you have questions, our knowledgeable home loan team are just a call or click away. Applying is easy, too. Just stop by a local branch, give us a call at 804-274-1200, or complete your application online.

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