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Sep 22

How to Use a Home Equity Loan to Go Green at Home

Reading Time: 4 mins

 Many homeowners may feel the need to renovate or upgrade their homes using the latest and most eco-friendly technologies and methods. However, trying to find the funds needed in order to renovate your home can prove challenging.

You can take out a home equity line of credit (HELOC) or a home equity loan in order to renovate your home. Here, we will focus on how to use a home equity loan in order to build an environmentally friendly home.

 

Benefits of Eco-Friendly Home Renovations

Going green will allow you to reduce greenhouse gas emissions and make a positive impact on the environment. You can also save quite a bit of money in the long run. An energy efficient house will drastically reduce your energy bill every month.

You will enjoy a higher return on your investment. Eco-friendly home renovations will eventually pay for themselves. You can also take advantage of incentives and grants to save even more money.

Your home will be more comfortable to live in and will also be healthier. The indoor air that you breathe will not be polluted, as green products and sustainable materials are not made with toxic materials that can make you ill.

Green homes also tend to be the most profitable ones in the industry. As such, if you want it to rapidly appreciate in value, then you should consider making eco-friendly renovations to your home.

 

Benefits of Using Home Equity for Renovations

Home equity is the difference between how much you owe on your mortgage and the market value of your home. The faster you pay off your debt, the more equity you will have accumulated in your home.

Home equity loans have many benefits, including low and fixed interest rates. Monthly payments tend to be lower when compared to conventional loans, as your home will serve as collateral in order to secure the loan.

You can also use a home equity line of credit (HELOC) in order to make green renovations to your home. A HELOC serves as a revolving credit line that you can make use of if needed. The interest rate of a HELOC is variable, and you can withdraw and repay funds as often as you like.

You will need to also pay off all of your interest payments as well in order to continue withdrawing funds, which is similar to a credit card.

Thanks to the flexibility of funds that a HELOC provides, you can withdraw the money only when needed. Once you have made the necessary upgrades to your home, you can wait until you need to make additional modifications in order to make use of a HELOC.

In the event that the repair costs rise due to unforeseen circumstances, your HELOC can be used to bail you out. One of the benefits of a HELOC is that it will reduce the stress that is often involved with ongoing home improvements.

A HELOC allows you to withdraw money gradually instead of being issued a lump sum payment, which is the case with a home equity loan. A HELOC allows you to make your home renovations in manageable stages.

You can book the work, complete it, and then pay off the amount owed before moving onto the next stage. The draw period lengths are also variable. As such, a HELOC is an excellent choice if you plan on financing several eco-friendly additions that will take several months (or even years) in order to complete.

As well, not only will the interest being charged be low, but you will only need to make interest payments during the draw period. As demonstrated, you can use a home equity line of credit for many different projects or purposes.

 

Different Ways to Use Home Equity for Green Renovations

You can use the home equity that you have built in order to install solar panels. You can also purchase energy efficient appliances, electronics, and other devices to reduce your carbon footprint, thus saving money on your energy bill and living a healthier life.

It is important that you conserve as much water as possible by using low-flow toilets and showers. You should also reduce waste, reuse products whenever possible, and recycle as many items as possible.

 

Go Green or Go Home

Eco-friendly renovations will help conserve our natural resources, reduce waste, save money, and help you live a healthier and more fulfilled life.

Either a home equity loan or a HELOC can be used in order to fund all of your green home renovations, as well as other projects that you may have.

Lastly, you should purchase products that have the ENERGY STAR label on them, and only use adequate energy sources in order to light your entire home.

 

Sources:

What is home equity and how do I use it? | Manulife Bank

The Multiple Benefits of Green Home Improvements | Smooth Decorator

What is home equity and why is it important? – Movement Mortgage Blog

5 Tips for Using Home Equity to Go Green at Home | Green World Investor

 

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.

 

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