Consider getting a home equity line of credit with your home loan.

Credit cards can be a good thing, but a home equity credit line is a better way to use your home equity to finance big ticket items—home improvements, paying off high-interest debt, financing a car, or paying for college tuition.

A credit card is a revolving line of credit that you use when you need it, and make payments only if you use it. But credit cards can charge very high interest rates.

Like a credit card, a home equity line of credit (HELOC) is also a revolving line of credit. You draw from it again and again as you need and make payments only if you use it. But, unlike most credit cards, you get a much lower interest rate with a home equity line of credit.

Using a home equity line of credit is a way of turning “bad debt” into “good debt”. In other words, the interest on the debt on your high-interest credit card cannot be deducted from your taxes. But the interest on your HELOC is usually tax-deductible*.

You can also get some flexibility with home equity loans that you wouldn’t get for say, with an auto loan. There are different home equity programs that have an interest-only option. From month to month with an interest-only loan, you choose to pay only the interest for a pre-determined amount of time or pay interest plus as much principal as you want. You can’t do that with an auto loan. Most lenders offer home equity lines of credit for up to $100,000. But Quicken Loans offers a line of credit for up to $500,000! This is a great option to have if you’re thinking of buying your dream vacation home.

It’s fairly easy to get a home equity line of credit—that’s one of the best things about it! Nowadays, many companies allow you to apply online and close within a very short period of time, typically 7-10 days. There’s less paperwork to deal with, the closing costs are less expensive and the process is just as easy as applying for a credit card. If you get a home equity line of credit at the same time as your first mortgage with the same lender, you only have one closing to go to for both loans.