Using a HELOC to Supplement Lost Income Due to COVID-19

COVID-19 has been causing fear and panic worldwide, making people shutdown businesses and go on a rampage at the stock market. It is no secret that millions of people are dealing with revenue and income losses. Aside from losing paychecks, people are facing overall financial uncertainty because health experts are warning that the current situation could last for months. Not having a current income and not having a lot of savings in the bank are legitimate reasons to worry, especially that there is no telling until how long the government’s help can last for those who can avail of it.

Why Use Your Home Equity as Emergency Fund?

Only a few people have emergency funds set aside, and even for those who have savings, the savings are usually just good for a few months. In the US, for example, about 39% are estimated to not have the cash reserves to be able to cover an extra $400 in expenses. It goes without saying that a higher percentage certainly do not have extra cash for bills for multiple months without income or reduced income. The good thing is that if you’re a homeowner, not having a paycheck is not a reason to panic just yet. If you own your home, you are sitting on a nest egg in the form of your home equity.

Get a HELOC Now

There are many reasons as to why a HELOC is a great way to tap your home equity during these financially trying times. One of the best reasons is that a HELOC gives you the flexibility to only use what you need and still give you access for more later. This means that with a HELOC, you can withdraw an amount you need to cover bills now and use it again to pay for other expenses in the future. If you end up not having to use your HELOC or end up only using a small portion of the approved funds for it, there are no penalties and you’ll only have to pay interest on the actual amount that you use. With a HELOC, if you qualify for a $100,000 HELOC and only end up using $3,000, you’ll only have to pay back $3,000 and the interest for the $3,000 you’ve used. You can access the other $97,000 when you need them as long as the HELOC is still within the terms. Because the funds are not given as a lump sum and instead, given as a line of credit, you’ll have more freedom and control over your expenses too.

Qualify for a HELOC

It is relatively easy to qualify for a HELOC although different lenders will have different requirements. Aside from having a certain percentage of home equity, the lender will also consider your credit score and other factors. You can call us at Homebase Mortgages for an assessment or consultation if you’re interested in possibly getting a HELOC to cover lost wages related to COVID-19. We’ll do our best to answer your mortgage-related questions and help you get through these trying times one smart financial decision at a time!