Home equity refers to the difference between the value of a property and the outstanding mortgage balance. As a homeowner, you can use the equity in your home to access funds for various purposes such as:
- Home Improvements
- Debt Consolidation
- Education
- Tax Debt
- Investments
- Paying Off Back Taxes On Property
- and other large expenses
There are several ways to use your home equity, including:
- Home Equity Loan: A home equity loan (a.k.a Second Mortgage) is a type of loan that allows you to borrow money using your home equity as collateral. This loan has a fixed interest rate and a fixed term, usually 10 to 15 years.
- Home Equity Line of Credit (HELOC): A HELOC is a type of loan that allows you to borrow money using your home equity as collateral. This loan has a variable interest rate and an open-end term. You can withdraw money as needed, up to your credit limit, and make payments on the outstanding balance.
- Cash-Out Refinance: A cash-out refinance allows you to refinance your existing mortgage and take out additional cash for other expenses. This is a good option if you want to use your home equity for home improvements or to pay off high-interest debt.
