Cash Out & Home Equity
Many people use their home not just as a living space, but as an investment. When you are making the most out of your investment, you want to pinch pennies where ever you can. Two great loan options for capitalizing on your real estate is through cash-our refinancing or getting a home equity loan. Both have their own benefits that can help you get the most of your home.
Not sure which is the most economical choice for you? We’re happy to help. If you’re having difficulty deciding how you want to use your cash out loan, you can consult with one of HomeVantage Mortgage expert mortgage planners by giving us a call or filling out the quick form below. We’re here to assist you however we can!
Cash Out Refinance vs. Home Equity
What is Cash-Out Refinancing?
In cash-out refinancing, homeowners refinance their mortgage for more than they currently owe, then keep the difference. This allows them to use their home equity to finance a major purchase. Cash out loans can be used for many things including vacations, weddings, college tuitions, home improvements, debt consolidation, and more. It’s up to you!
Any time you refinance is technically “cashing out.” The reason it is known as “cash-out refinancing” is because you are not using the newly procured funds to pay off your house. Instead, you may be utilizing the funds for something else entirely. If you were to use the funds to pay off by utilizing your house, then you would simply be refinancing your home.
What are Home Equity Loans?
A home equity loan allows you to use the value of your house to get a loan. For instance, let’s say you got a mortgage for $300,000 on your home. However, the value of your home has gone up to $350,000. In that time, you have accumulated $50,000 equity on your home. You could utilize this equity and procure a loan worth that much.
The home equity loan is an alternative to cash-out refinancing. Getting a loan on your home equity can be the most beneficial if you’ve had a great amount of equity build up on your home for a significant amount of time. That way, you are maximizing the value of the loan you are receiving. However, it is important to know that a home equity loan functions exactly the same as a “regular” loan. You must pay it back, on time, at the agreed upon amount.
To get more information, contact HomeVantage Mortgage to get started on your refinancing journey. We want to make sure that you make the most out of your home.