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As a homeowner, you may have heard of refinancing as a way to get by equity Especially outside your home, with one Cash-out refinancingYou refinance your existing mortgage for more than you owe and receive the difference in cash.
But you may not want to do a cash-out refinance. Maybe you already have a low interest rate or good terms on your existing mortgage, and you don’t want these to change with a refinance. Maybe you’re looking for features that don’t require a refund. Or maybe you want to explore all your options first to make sure a cash-out refinance is right for you.
Whatever your reason, it’s helpful to know the other ways you can tap into your equity so you can make the best choice.
Explore your home equity loan options online today.
How to get equity out of your home without refinancing
In addition to cash-out refinancing, you can pull equity from your home with the following products.
Home equity loan
A Home equity loan, also known as a second mortgage, enables you to borrow a lump sum of money using your home as collateral. Home equity loans typically have lower interest rates than credit cards and personal loans because your home secures the loan.
You make fixed monthly payments on the home equity loan starting when you receive the funds. You also continue to make your principal mortgage payments (at the same rate and on the same terms).
You can use the home equity you borrow through this loan for anything you like. However, you may be able to if you use it for an IRS-approved home improvement Deduct interest Tax time.
Compare home equity products here to find the right one for you.
Home Equity Line of Credit (HELOC)
A Home Equity Line of Credit (HELOC) A revolving line of credit that works like a credit card. Lenders approve you for a certain limit based on your home equity and your credit score.
HELOCs typically have a variable interest rate, which varies with the federal funds rate, and these rates are generally lower than other types of loans. Like a home equity loan, a HELOC pays interest duty free If the funds are used for IRS-approved purposes.
You can borrow as much or as little as you need up to the HELOC limit Draw period (which usually lasts five to 10 years). Once the draw period ends, you start paying back the amount you borrowed (not the full credit limit). You’ll also still need to continue making your principal mortgage payments.
Check current home equity rates now and find out how much you can borrow.
reverse mortgage
A Reverse mortgage A unique type of loan available to homeowners age 62 and older. This allows you to access your home equity and convert it into cash in the form of a lump sum, line of credit or monthly payment.
dislike Home equity loans and HELOCs, you don’t have to pay off a reverse mortgage as long as you still live in the home. Payments are made only if you move permanently, sell the property or move away. However, you must continue to pay your homeowners insurance and property taxes, or you risk losing the home to foreclosure.
Additionally, your reverse mortgage funds will be used to pay off your existing mortgage first, with the remaining funds going to you. This means that in addition to receiving these funds, you will no longer have a monthly mortgage payment.
Which home equity product is right for you? Find out by viewing your options here.
Bottom line
A cash-out refinance is one way to get equity out of your home, but it’s not the only way. Home equity loans and HELOCs are also viable options, as are reverse mortgages for older homeowners Which option is best for you will depend on your personal financial situation.
Before making a decision, be sure to do your research, compare rates and fees, and consult with a financial advisor or trusted lender so you can make the right choice for your financial goals. With the right approach, tapping into your home equity can be a smart and strategic move to get the money you need Various costs.
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