Paying off credit card balances and consolidating debt are some of the most common ways homeowners use their home equity, but there are plenty of alternative ways to get equity out of your home.
The longer you make payments on your mortgage, the more your equity grows - giving you more power to use that value to your advantage.
Here are some other great ways you can benefit from building equity:
Cash out refinancing lets you use equity by getting a new mortgage. Essentially, you replace your current mortgage loan with a higher amount, and receive the difference in cash. The cash is tax-free and can be used for anything you need.
A home equity line of credit or HELOC is a second mortgage with a credit amount you can draw from when needed. HELOCs are similar to credit cards in that you only pay for what you actually use until the designated draw period ends.
A home equity loan is another second mortgage option, complete with a separate monthly payment. These loans often have higher interest rates than your initial mortgage, but use your home's equity as collateral.
While similarly named, home equity loans and HELOCs function differently. With an equity loan, you get a lump sum of money at the beginning and make payments back over the life of the loan. A HELOC, by contrast, lets you draw whatever amount you need during a fixed period.
The key difference is with a loan, you'll have a regular monthly payment with a locked-in interest rate. With a HELOC, your payments and interest rates can vary.
When is it better to use a HELOC versus a loan? The important difference is flexibility. A HELOC allows you to pay for variable expenses and emergencies, and can be a great benefit for long-term costs like ongoing remodeling or renovation projects.
Consider all details of your financial situation when deciding how to use your home equity. Based on your goals and limitations, you can find the best possible way to benefit from your investment.
As an incredibly driven and self-motivated Realtor®, my utmost passion lies in serving your best interests and guiding you through one of life's most significant decisions. With a deep understanding of the importance of a comfortable and nurturing home environment, I strive to help families create lasting memories in their ideal living spaces. My clients are my top priority, and I am committed to providing a seamless, stress-free experience from start to closing.
Originally from Rio de Janeiro, Brazil, I have called Massachusetts home since 1988, immersing myself in the region's rich natural beauty and historical heritage. Over the years, I have cultivated strong relationships within the community and acquired an intimate knowledge of the local residential markets. This unique combination enables me to offer invaluable insights and act as a dependable resource, skillfully matching clients with properties that perfectly suit their needs.
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Beyond real estate, I have a profound love for travel, enjoy golfing and participating in fitness classes. I am actively involved in volunteering with organizations such as "We all Volunteer", JFS, and I passionately support the life-saving work of St. Jude's Children's Research Hospital. Additionally, I nurture a deep interest in studying architectural characteristics during my travels.
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