Financial preparations for your home projects
According to the Building Industry of Hawaii, approximately 64 percent of homes on Oahu are more than 30 years old. Chances are, if you are living in one of these homes, it’s showing its age and it may be time for a renovation. With property values on the rise, a home equity line of credit (HELOC) could be one of the best ways to finance a project.
HawaiiUSA Federal Credit Union (FCU) assistant vice president of consumer credit Chris Garnett recommends first talking to a loan specialist to fully understand all the financing options available to you.
“Know what you’re getting into,” advised Garnett. “There are many benefits that a HELOC offers a homeowner. The application process is generally completed within a few weeks and accessing your funds is as quick and easy as using checks. Because it is a line of credit, you advance the amount you need and only incur interest on the amount you draw. As you pay down the balance, the funds become available again so you can draw again as your needs arise.
“Flexibility is the key with a HELOC,” he continued. “Beyond renovation expenses, a HELOC is a great way to consolidate debt, purchase a car or pay college expenses.”
An attractive benefit of a HELOC is the tax advantage it offers. Garnett recommends consulting with your tax advisor to learn how a HELOC will impact your tax situation.
“But a HELOC isn’t for everyone. HELOCs aren’t designed for everyday use. While they provide lower monthly payments at a decent rate, you have to remember that your home is collateral with a HELOC, so you don’t want to risk overusing it,” cautioned Garnett.
“Also, HELOC rates are oftentimes variable and will rise and fall with the market,” he continued. “For those who want the security of a fixed rate, look for a fixed-rate HELOC option or a second mortgage as an alternative.”
Garnett offered a few final words of advice. “Don’t start your project before you close on your HELOC. Open building permits or unfinished construction may cause delays in the processing,” advised Garnett.
Garnett and his crew at HawaiiUSA have seen it all over the years. The credit union has offered HELOC financing for almost 30 years. From a simple room renovation to a teardown and rebuild, call HawaiiUSA for information on how to get off to a good start. Visit one of its convenient branches or call 534-4300. For toll-free, call 800-379-1300.
contact // 534-4300
address // 1226 College Walk