Looking for full-time employment in your chosen career field should certainly be your primary focus. However, you can’t ignore opportunities to keep your finances afloat while you find that next opportunity.
As you look for ways to keep yourself afloat during this period of unemployment, you may consider financing solutions that can provide cash. Getting funds that you keep you out of the red for a few months may sound like a no-brainer. However, there are some key points that you’ll want to consider before you get a loan that you potentially don’t have the means to pay back.
- How much time will you have before the new loan payments start? Will that be enough time for you to find new full-time employment?
- How much does the new loan increase your financial risk? What will you be risking by taking those funds out?
- How much will this new loan cost you and when will you need to pick up that tab?
Here are some of the most common financing solutions that people consider when they’re facing unemployment. Understand the risks of each of these options and make sure to talk to an expert before you use any financing solution during a period of unemployment.
Home equity loans / HELOCs
With these types of financing solutions, you borrow against the equity built up in your home. Equity is the fair market value of your home minus the remaining balance on your mortgage. You can generally borrow up to 80 percent of the equity you have available.
With a home equity loan, you borrow a set amount of cash in a single lump-sum that you pay back over time. The payments on a home equity loan will generally start immediately. With a HELOC, the lender extends you a line of credit that you can borrow from as needed. There’s generally a 10-year draw period, where you’ll only be required to pay interest charges on what you borrowed. Read more