When saving for the future, many people forget that their children's weddings will be another huge expense. Home equity loans or home equity lines of credit are viable, fast, and easy financial options that can help make it a very special day.

Imagine this scenario: Your daughter runs into your arms, ecstatic with news of her engagement. Her stomach is full of butterflies and tears are streaming down her cheeks. You start to feel something in your stomach too-but it's more like an ulcer. Tears of fear, not joy, come to your eyes. How are you going to finance the wedding of her dreams?

There are three convenient places to look for the finances you'll need: A 0 percent credit card, a home equity line of credit (HELOC), or a home equity loan.

Credit cards to the rescue

If you're a person who can make disciplined payments, you can use a 0 percent credit card to pay for the wedding. The trick with 0 percent credit cards is that you must pay them off before the interest kicks in. Often, once the promotional rate expires, the interest rates on these cards are more than 18 percent, higher than alternatives. If you're not disciplined, or don't foresee an influx of cash with which you could pay off this card, look to your home for other options.

Home equity line of credit
Another choice to keep the dreamy look in your daughter's eyes is a HELOC. You can get one for up to 80 percent of the equity in your home, and make payments only on the amount you withdraw. If you only use $18K for the big event, for example, that's all you have to repay. The interest rates on these loans are adjustable, so they may change on a monthly basis, but they're generally interest only, so your payments will be small. Don't forget that you still owe the principal. It's important to review the terms of the loan carefully, and watch for hidden fees.

Home equity loan

A home equity loan may have all the terms and conditions of a first mortgage, including some tax advantages. However, since it's a second mortgage on your property, make sure that you can comfortably afford the extra payment. You'd hate to start your daughter on this new phase of her life by having to move in with her. The interest rates will be fixed, and you can take up to 30 years to repay the loan.

There are several ways to provide your little girl with the wedding of her dreams. The options with the least amount of risk are the home equity loan and the HELOC, which provide quick cash with a variety of repayment options. If you have equity in your home and a modicum of discipline, you can give your daughter to her new husband with a large check and a happy heart.

Published on January 27, 2008