A Personal Look at Home Equity Line of Credit (HELOC)
I always taunted my boyfriend Eric about the home theater he dreamed about. He always responded by teasing me about the walk-in closet and luxury bathroom I described from my daydreams.
When we got married and bought our first house, it was plenty roomy, but was older construction and, understandably, had none of our grandly imagined amenities. Our first child Tyler came along before we'd scarcely given thought to having kids, or what that would mean for our budget. For the first time, finances became stretched. We had our hands full anyway and started to forget about the remodeling ideas.
Strangely enough, it was Tyler who reawakened them. "Look, Mommy," he said, a few days after his sixth birthday. He was gesturing at an ad in the paper I was reading. "That's Mr. Jeff's house. " He was absolutely right, as he pointed to a picture of our next-door neighbor's home which had been on the market for a few days. I started to congratulate him, but my eyes were drawn back to the for-sale ad. Our neighbor had priced his house at about $40,000 more than I'd thought the homes in our neighborhood were worth.
I blinked and looked more carefully. My dream bathroom and walk-in closet popped back into my head, and I made a note to talk to Eric when he got home that night.
We had our home appraised the next week, and sure enough, its value had gone up. We sat down with a loan officer a few days later to take a look at our options. The home equity line of credit (HELOC) looked most interesting. Our loan officer explained that by using a HELOC, we could draw on the loan money again and again, if we needed to. We agreed immediately that the HELOC would be the way to go. We were happy that we didn't have to fully refinance our entire mortgage, which was at a great rate that we didn't want to change. Plus, with the raise that Eric was expecting next month, we would have no problem covering the slightly higher monthly payments.
Our loan officer asked if we wanted a fixed or adjustable rate, explaining that while the adjustable rate was lower now, our monthly payments could go up if it rose in the future. We chose the fixed-rate option and closed on the loan at the end of the month.
Because we'd selected a HELOC, we could have decided to draw only part of the money to start out with, but Eric said he had a surprise in mind and wanted to draw it all.
Work began right away. We moved into the upstairs room next to Tyler while our closet, master bathroom, and what had been the den started receiving their make-over. After just one week, I commented that I didn't know how we were all going to fit upstairs for another two. That night at dinner, Eric announced his surprise. We were all going to take a two-week vacation while the remodeling work was being completed. It was a great relief to me, and Tyler couldn't have been more excited about taking his first-ever vacation, especially after we explained what the word meant.
Vacation was glorious! Tyler got to see so much of the country for the first time, and Eric had planned a trip route full of interesting museums and amusement parks. By the time we headed home, we were ready to relax into our newly remodeled house.
As we drove up the driveway, our house looked bigger than ever. I checked out our bedroom first, admiring my long walk-in
closet and my bathroom, which had tripled in size. I could hear Eric oohing and ahhing over the new home theater a few rooms away.
What I hadn't expected to hear was Tyler's scream from upstairs. I rushed up to see what was wrong, and I heard Eric's footsteps right behind mine. When I turned the corner into Tyler's room, I found him bouncing on a new trampoline in a room almost half again as big as it had been. The carpet was four large squares of different colors, just like what he'd said he wanted. The room was painted in four carpet-matched colors as well, with Tyler's bed over in the blue corner, his toys in the red, his clothes and closet in the yellow, and the area by the door in purple. Even the door itself was purple. Tyler kept whooping and jumping from one part of the room to the next.
"I thought the vacation was the surprise," I said, still in awe.
"I thought we could all use a few more surprises," Eric replied.
Tyler didn't seem to stop whooping for the next week. It was a good thing my new walk-in closet was on the extreme opposite end of the house. It was also a good thing that part of the remodeling for the home-theater had included soundproof walls. Even if Eric or I had been able to hear Tyler's bouncing and yelling, we couldn't really have blamed him. After all, on the inside, we were both doing the same thing.