Home equity is the difference between your home’s current market value and the outstanding balance on your mortgage. If you own a home and have been making regular payments on your mortgage, chances are you have built up some equity. Home equity can be a powerful financial tool, and there are a few different ways to access it.
When it comes to getting home equity, there are three main ways to do so: home equity loan, home equity line of credit, and reverse mortgage. Each one has its own unique benefits and drawbacks, so it’s important to understand which one is right for you.
Here’s our list of the 3 smartest ways for you to get yours:
Home Equity Loan
One way to access your home equity is through a home equity loan. A home equity loan is a lump sum loan that is typically used for home improvement projects or other major expenses. Home equity loans typically have fixed interest rates, so you’ll know exactly how much you’ll need to pay each month.
Home Equity Line of Credit (HELOC)
Another way to access your home equity is through a home equity line of credit (HELOC). A HELOC is a revolving line of credit that can be used for ongoing expenses like remodeling or tuition payments. HELOCs typically have variable interest rates, so your monthly payments may fluctuate.
Cash-Out Refinance
A cash-out refinance replaces your existing mortgage with a new loan for more than what you currently owe. You’ll receive the difference in cash, which can be used for any purpose. Cash-out refinances are an option if you want to borrow a large amount of money all at once and may offer lower interest rates than other types of loans. No matter which option you choose, be sure to shop around for the best rates and terms before taking out a loan against your home equity.
Want to Learn More?
Choosing the right option for accessing your home equity will depend on your financial needs and goals. Home equity loans and HELOCs may be a good fit if you need funds for a one-time expense. A cash-out refinance could be right for you if you’re looking to consolidate debt or make improvements to your home. Whichever route you choose, tapping into your home equity can be a smart way to use the value of your home to reach your financial goals.
For more information on home equity or to speak with one of our experts, don’t hesitate to reach us at Ingram Mortage Team. We are a Mortgage broker in Surrey and Langley. You can call us at 604-763-4647 we would be happy to help! What option are you leaning towards?