If you’re considering borrowing money to cover the caterer, you aren’t alone. According to Student Loan Hero, 74% of couples go into debt to pay for their big day.
A home equity loan is one potential avenue to the ceremony and reception of your dreams — here’s what you should know about using one to finance your wedding.
1. Find Your Best Lender and Rate
If you decide a home equity line of credit (HELOC) is the way to go, your first task is finding the right lender. Start your search early to give yourself the best chance of finding the lowest possible interest rate.
Remember, too, that you have the option of a cash-out refinance instead of a HELOC. You could get a lower fixed interest rate — making this choice appealing if you’re currently in an adjustable-rate mortgage that may increase soon.
2. Investigate Your Options
One reason that home equity lines of credit make appealing choices is their superior interest rate. You’ll pay far less back over the life of the loan than you would on most credit cards or unsecured personal loans.
However, your home isn’t the only money-making asset you have. You might find it more palatable to refinance your car than borrow against the roof over your head. In some parts of the country, auto refinance rates start as low as 2.74%.
You could also look for ways to pad your income instead of borrowing. For example, you could sell your photographs online or take on a side hustle designing websites if you have the requisite skills.
3. Create a Payback Plan
Finally, starting your new marriage in debt is somewhat of a risky proposition. Next to infidelity, money woes make up a leading cause of divorce.
Therefore, you should create a payback plan before you take out the cash. Sit down with your future spouse and review your big day budget. Are there any places you could compromise or cut back a bit? You don’t want to feel cheated on your wedding day, but nor do you want to set yourself up for an uncertain economic future.
Use a Home Equity Loan to Finance Your Wedding
A home equity loan can be a low-interest way to pay for your big day. Now that you know the facts, will you use this method to finance your wedding?