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Should you use your home to pay medical bills?

  //house-home.news-articles.net/content/2025/06/2 .. ould-you-use-your-home-to-pay-medical-bills.html
  Published in House and Home on Wednesday, June 25th 2025 at 4:29 GMT by WGME

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Flexibility: HELOCs offer flexibility in terms of how much and when you borrow. This can be particularly useful for medical expenses, which can be unpredictable and vary in amount.

Lower Interest Rates: Compared to credit cards and personal loans, HELOCs often have lower interest rates because they are secured by the home's equity. This can make them a more cost-effective option for financing medical bills.

Tax Deductibility: Interest paid on a HELOC may be tax-deductible if the funds are used for qualified medical expenses. The article advises readers to consult with a tax professional to understand the specific tax implications.

Assess Your Home Equity: The first step is to determine how much equity you have in your home. This is calculated by subtracting the outstanding mortgage balance from the current market value of the home.

Apply for a HELOC: Once you know your equity, you can apply for a HELOC. The application process typically involves a credit check and an appraisal of your home.

Draw Funds as Needed: After approval, you can draw funds from the HELOC as needed to cover medical expenses. The article emphasizes the importance of keeping track of how much you borrow and the interest rates.

Repay the HELOC: During the repayment period, you will need to repay the borrowed amount plus interest. The article suggests creating a repayment plan to manage this effectively.

Immediate Access to Funds: HELOCs provide quick access to cash, which can be crucial in medical emergencies.

Lower Costs: The lower interest rates associated with HELOCs can result in significant savings compared to other forms of credit.

Flexibility in Repayment: Borrowers can choose how much to repay each month during the draw period, providing flexibility in managing cash flow.

Potential Tax Benefits: As mentioned earlier, the interest paid on a HELOC used for medical expenses may be tax-deductible, offering additional financial relief.

Risk of Foreclosure: Since a HELOC is secured by your home, failure to repay can result in foreclosure. The article stresses the importance of understanding this risk before taking out a HELOC.

Variable Interest Rates: Most HELOCs have variable interest rates, which can increase over time. This can make budgeting more challenging and potentially increase the cost of borrowing.

Fees and Closing Costs: There may be fees and closing costs associated with obtaining a HELOC, which can add to the overall cost of borrowing.

Impact on Home Equity: Using a HELOC reduces the equity in your home, which could affect your ability to sell or refinance in the future.

Personal Loans: Personal loans can be used to cover medical expenses and may be a better option for those who do not want to risk their home equity.

Credit Cards: Credit cards can provide immediate access to funds, but they typically have higher interest rates than HELOCs.

Medical Payment Plans: Some healthcare providers offer payment plans that allow patients to spread out the cost of medical bills over time.

Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs): These accounts allow individuals to set aside pre-tax dollars for medical expenses, potentially reducing the need for borrowing.