Using Your Equity
You have the option to utilize your home’s equity by applying for a cash-out refinance, taking out a home equity loan, or setting up a HELOC.
Once in your hands, the equity in your home can be used to pay off consumer debts. It can also be put toward investment strategies that will give you a return on your money, such as furthering your education or purchasing additional real estate.
Options Financial Residential Mortgage cautions you when using equity to purchase depreciating items, such as cars, vacations, or other consumer luxuries. Ultimately, equity should be used to help move you toward a better financial position.
A Cash-out Refinance will pay off your existing mortgage, leave you with the additional money after all outstanding fees are processed, and then the choice to start over with a new mortgage loan. This loan can differ in type, term length, interest rate, monthly payment amount, and total loan amount.
Home Equity Loan
A Home Equity Loan adds up to the total amount of equity available in your home to provide you with a one-time, lump sum of money. It is an additional loan on top of your existing mortgage. However, a home equity loan has its own separate interest rate and payment plan.
A Home Equity Line Of Credit (HELOC) connects your home’s equity directly with a line of credit. You can typically borrow from this line of credit for 10 years. The principal plus interest must be paid back within a 15-year repayment period beginning directly after the line of credit is closed.