3 Ways You Can Use Home Equity as a Source of Funds

Calculator with coins on top of some documentsYour home can be your ATM when you need to come up with some extra cash. You can use the home equity you have built over time to get low-cost funds. Here are three ways you can borrow on your home equity.

1. Home Equity Line of Credit

A home equity line of credit (HELOC) is a flexible loan with no or few closing costs. The interest rate is variable, but your lender may offer a fixed rate for some years. A HELOC is like a credit card in that it’s a revolving source of cash. The homeowner accesses the pre-approved credit line as needed.

Wasatch Peaks Credit Union notes that you could access your HELOC funds in Ogden in various ways. You may use an online transfer, special checks, or a credit or debit card linked to your account.

2. Home Equity Loans

Are you looking for a specific amount of cash for a one-time expense? Since it’s disbursed as a lump-sum amount, a home equity loan can suit you perfectly.

Home equity loans usually offer fixed interest rates. So, the loans come with predictable repayment costs. The loan may be tax deductible if used to improve the value of the home.

3. Cash-Out Refinance

You could convert your home equity into funds by replacing your existing mortgage with a larger home loan. You will then pocket the difference of the two mortgages in cash. A cash-out refinance may be a good option if mortgage interest rates have gone down.

Home equity is a valuable resource. If you have enough equity, you can tap it for a loan with a competitive interest rate.

You can take a home equity loan if you need cash for a one-time expense. A HELOC can suit you if you need a cheap loan to finance ongoing expenses. If you have accumulated significant equity, need cash, and want a better-terms loan, you may consider a cash-out refinance.

Posted on by George Cummins in Money Times

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