Home Equity Options

Whether you're looking to finally renovate your kitchen, buy a new car or consolidate debt; your equity can be put to use in a variety of ways. The average homeowner has $185,000 in available equity which is an all-time high! Many homeowners have chosen to draw money from their homes, which they can traditionally do in three ways. 

• Cash Out Refinance
• Home Equity Line of Credit
• Home Equity Loan

This is a refinance of your existing mortgage. With Conventional and FHA loans you can borrow up to 80% of the home’s value. VA loans allow you to borrow 90-100% of the appraised value. The equity that you are seeking is added to your existing mortgage and refinanced at a new rate and term. For example: If you currently owe $200,000 on your mortgage and were looking for $50,000 in equity, your new loan amount would be $250,000 (not including closing costs). The $250,000 loan amount would be refinanced at current rates, with a term of your choosing (10-30 years), resulting in an updated payment.

Key Benefits to a Cash Out Loan

• Only have one mortgage payment, making your finances easier to manage

• Consolidating debt can saves hundreds of dollars per month

• Interest paid might be tax deductible

• In the right market, you might be able to lower your interest

• Often a cheaper way to fund home renovations

2. Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit (HELOC) is like a giant credit card where your home is used as the collateral. You can borrower against the line of credit as needed for any qualifying expenses. Use your HELOC to consolidate debt, make home renovations or fund any upcoming large purchase.

Key Benefits to a HELOC

• Use as needed. You do not need to receive and start making payments right away

• Payments based on the balance of the credit line. 

• Protects your lower 1st mortgage rate

• Interest only, making the payments more affordable. You may pay additional towards the principal

• Consolidate debt, make home renovations or pay for college. Whatever the need for cash, your home equity can help. 

3. Home Equity Loan (HELOAN)

A Home Equity Loan (HELOAN) is a 2^nd mortgage. You maintain your first mortgage rate and payment and take out a 2^nd loan to fund your equity needs. A 2^nd mortgage usually comes at a higher rate when compared to a 1^st mortgage. You will start making payments as soon as you close and receive your home equity. HELOANS often come with fixed rates and no pre-payment penalties.

Key Benefits to a HELOAN

• Protects your lower 1st mortgage rate

• Comes with fixed rates and payments

• No prepayment penalities

• Install a pool, buy an investment property or pay off credit card debt. A HELOAN can help you achieve all of your home equity needs!