Equity is the difference between your home’s value and your mortgage balance — and most homeowners have gained a lot of it over the past few years.
Thanks to rising home prices, most homeowners are sitting on more equity than they might think. The typical homeowner had about $270,000 in home equity at the beginning of 2023.
You can tap into home equity when you need it for home repairs, medical bills, college tuition or any other expense you might face. Here are four methods for tapping your home equity.
- Cash-Out Refinance: With this method, you would replace your current mortgage loan with a larger one, then get the difference between the two balances back in cash to use how you’d like.
- Home Equity Loan: This is a type of second mortgage that allows you to borrow from your home’s equity. You would then pay it back monthly, plus interest, for 10 to 30 years.
- Home Equity Line of Credit (HELOC): Unlike a home equity loan, this is a line of credit that lets you borrow from your equity. In other words, you withdraw money as needed, much like you would with a credit card.
- Home Equity Agreement: This is a fairly new option, allowing you to offer a company a portion of your home’s equity in exchange for a lump sum. Then, you repay the money once you sell or during a set period — but without interest.
Do you want to learn more about homeownership? Get in touch if you have questions or if you’re ready to begin the search for your next home.