Home Equity: How to Use It
A refinance pays off your current mortgage and gives you cash based on your equity. According to Corelogic the average homeowner gained $17k in equity last year ($14k in Florida).
Benefits Include:
l Lowering or locking in an interest rate
l Save more money over time with a lower interest rate (we are seeing record lows); including shorter loan terms
l Getting large sums of money ($30,000 or more)
Home equity loans (second mortgage) are installment loans that are paid out in one lump sum.
Benefits Include:
l repaying credit card debt (increased credit score opportunity)
l remodeling projects (kitchen, bathroom, new floor, new pool)
l buying that new car you have been eyeing
A home equity line of credit works like a credit card – you agree to a pre-set limit and borrow as needed, or in the event of an emergency, usually for up to 10 years.
Benefits include:
l debt consolidation
l major home improvements