Do You Know What You Can Do With Your Home Equity?

Home equity is the portion of your home that you’ve paid off, in relation to today's market value: it’s the difference between what the home is worth and how much is still owed on your mortgage.
As time goes on and you continue to pay down your mortgage principal, your equity grows. Usually, the longer you own your home, the more equity you gain ... because you are paying down your mortgage. 𝗧𝗶𝗺𝗶𝗻𝗴 𝘁𝗵𝗲 𝗺𝗮𝗿𝗸𝗲𝘁 𝗰𝗮𝗻 𝗯𝗲 𝗲𝘅𝗰𝗶𝘁𝗶𝗻𝗴!
Tapping into your home’s equity can be a good way to access cash quickly to pay for renovations or pay off high-interest credit card debt, but it’s important to first determine how long you'll live in your home before borrowing against it. You don’t want to borrow more than you need to or put your house at risk of foreclosure for an irresponsible purchase.

This type of refinancing replaces your existing mortgage with a new home loan for more than your current loan amount - with the difference being the extra cash. Lenders will generally let you borrow enough to pay off your current mortgage and take out more cash, usually up to 80% of your home's value.

A HELOC is another way to borrow against the value of your home. With a HELOC, you receive a line of credit usually 80% of your home's value, minus the amount of your current loan amount.

With a home equity loan, instead of getting a line of credit that you can tap into as needed, you would receive a lump sum of money. A home equity loan could make sense if you don't want to do a cash-out refinance because you have a low-interest rate.

Before you "run to the bank," it is important to understand and weigh the pros and cons of each option, as well as your personal financial goals. If you're thinking about tapping into your equity, send me a message — I'd be happy to provide a free home equity assessment!

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