Your home is probably the most valuable asset you have. Perhaps one of the biggest benefits to owning a home is that you have the ability to take a loan that is based on the value of your home. Referred to as a home equity line of credit (HELOC), this is can be either very beneficial or detrimental. Depending on the reasoning for using a HELOC loan, you may find yourself in a better or worse situation.

So when should you consider using a HELOC? Here are three situations:

1. Home Remodeling

If you want to update your home and remodel it, a HELOC may be a fantastic option. You have access to a large sum of money that you can use as you please to purchase new appliances, upgrade plumbing fixtures, or even add an addition. Even better, there is a lot of wiggle room when it comes to a HELOC loan. While there is a max loan amount (depending on the equity of your home) there is no minimum. So if you budget smartly, you can easily cover unexpected costs with your loan. There is also no time-limit on withdrawing funds either, which means you can slowly remodel over time without needing to take out multiple loans. Plus, you're adding more equity to your home – and that is always a good thing.

2. Refinancing

Another good reason to consider a HELOC loan is to refinance your home. If you had poor credit, or bad luck, and got stuck with a very high interest rate you may be struggling to pay off your mortgage. Luckily, you can easily refinance your home with a HELOC. Although you are essentially re-purchasing your home, doing so can be very helpful. By doing this when you've repaired your credit, you can get a lower interest rate.

Finally, if you do refinance your home you can completely change your mortgage. This is extremely helpful, especially for those who have pre-payment penalties. The ability to change your mortgage and payment options can help you pay off your balance quicker.

3. Unexpected Expenses

A HELOC loan may also be a good idea for those large, unexpected expenses. There are many unexpected costs that could easily send a family into debt. However, if you own a home you have access to a low-interest loan that can used as needed. Whether you need to pay down medical bills or live off of your savings for a few months, a HELOC loan makes it possible.

HELOC loans are very helpful for many homeowners. While these types of loans do offer many benefits, you should still weight the risks carefully. As with any credit decision, you want to ensure that you can pay back your debt so that you do not lose your home. Contact a lender, like Rio Grande Credit Union, for more help.