Tapping into your home’s equity is often your smartest and fastest solution to life’s biggest expenses, and as a homeowner, equity may be your most significant asset.
Your home equity the value of your home less the balance still owed the loan. Your equity increases slowly with each mortgage payment, or sometimes it will experience rapid growth due to the local housing market or value-boosting home improvements that you’ve done to your home.
What Can Your Home Equity Do For You?
With your home equity, you can update your home, make necessary improvements, consolidate your debt, pay for unexpected or emergency expenses, or pay for your children’s tuition.
Home equity assets are how countless homeowners across the country take care of large expenses without relying on high-interest rate credit cards.
You can tap your home equity in a variety of ways. Read below to see your options, however, for a professional and personal recommendation, please contact us.
Your loan options for accessing your home equity:
Cash-out Refinancing: With a cash-out refinance, you refinance your current mortgage, and get a new larger sum home loan. In most cases, you will have access up to 80-90% of the equity, which you will have in cash. Besides having a large sum of cash, another bonus is that your interest rate may be lower than your previous home loan.
Home Equity Loan: With this type of fixed-rate loan, you are using your home as collateral to borrow up to 85% of your home equity. You’ll receive your home equity funds in one lump sum, giving quick access to the money you need to handle those large expenses. Repayment is done easily through monthly payment.
Home Equity Line of Credit (HELOC): A home equity line of credit is a variable interest rate loan that allows you to access up to 85% of your home equity. While your payments will be made monthly, similar to a home equity loan, with a HELOC, your payments may change month to month due to the variable rate. Also, instead of a lump sum, a HELOC has a limit to the amount you can borrow, working similarly to a credit card but without the extravagant credit card rates. Another advantage your HELOC is that the interest you pay is applied only to the amount you take out.
A large sum of money may be just what you need to ease your financial burden, realize your children’s educational dream, or to improve your quality of life –and your home equity can help you achieve those goals!