Leveraging a HELOC as an Emergency Fund
Have a financial fallback in place before you need it.
When preparing for hurricane season, many Hawaii homeowners immediately think of hurricane insurance. While obtaining disaster coverage is important, few realize the benefits of utilizing a home equity line of credit, or HELOC, as an emergency fund. If you have a fair amount of equity in your home, a HELOC may provide backup funds you can access when you need it most.
Using a HELOC as an emergency fund allows homeowners to access a large sum of money when unplanned expenses arise, such as emergency home repairs after a hurricane or a flood. HELOCs provide homeowners with revolving lines of credit, allowing them to pay for large expenses using the equity in their homes. Although any funds borrowed from a HELOC must be paid back with interest, they are similar to credit cards; if the credit line is not used, no interest is incurred. Since HELOCs usually offer lower rates than credit cards, opening one now can save you both time and money.
Homeowners should consider several factors before taking out a HELOC, including their existing level of debt, job security and cash flow. HELOCs, and emergency funds in general, help people prepare for events outside of their control. Whether homeowners are risk-averse or not, knowing they are able to cover expenses in case of an emergency can provide peace of mind. And in times of need, having a HELOC available also allows homeowners to focus on the issues at hand, rather than expending energy trying to raise funds.
To get started, evaluate your financial situation and see if a HELOC is right for you. Having a HELOC available before you really need it provides quick and convenient access to funds in case of an emergency or for planned expenses. You may never need to tap into it, but if you do, it’s a helpful line of defense against the unexpected. To learn more, talk to a personal banker at any First Hawaiian Bank branch or go to FHB.com today.