Learn about the process
If you’ve paid off a substantial portion of your home, you’ve likely built equity up from it.
Both home equity loans and lines of credit (HELOCs) put that equity to use by allowing you to re-invest the difference between your home’s value and your remaining debt, known as your home equity, toward whatever you choose.
Keep in mind, this isn’t free money.
Your home equity loan adds to the remaining mortgage debt, and home equity loan rates will also cost you interest.
However, the loan can be used in many useful ways:
- Enable you to waive insurance fees on your existing home loan
- Make a down payment on a second home or investment property
- Secure a lower interest rate and reduce the overall interest you’ll need to pay
Done correctly, home equity loans can save you thousands of dollars as well as open up new avenues of opportunity.
Things to consider
Unlike a first time home buyer loan, a home equity loan is what’s known as a secured loan, where your house’s value serves as your collateral.
Conversely, unsecured loans have no such backing and rely solely on the borrower’s financial responsibility to pay back the money.
A home equity loan is seen as less risky for the lender, allowing them to offer notably lower interest rates.
Even though a secured loan is more cost-effective for you as the borrower, failure to pay the loan in time can be far more consequential and can lead to the loss of your house.
But when properly managed, you can invest that money in a wide variety of profitable ventures.
- Starting a small business
- Paying for college
- Buying a new property
- Consolidating your debts
A home equity loan gives you the freedom to do all of this and much, much more.
If you’ve decided to invest a portion of your home equity, you need to be aware of the debts that come with it.
Be certain you have the funds to handle a home equity loan before taking it out, and avoid the temptation to use it as a license to spend frivolously.
Our team at Rosa Briggs Home Lending will help you set clear and achievable goals for those funds and ensure that you stick to them. By partnering with our expert advisors, you will set yourself up for success.
Our expert team of mortgage loan experts is fully equipped to walk you through every step of the mortgage process. From the moment you contact us until your first step into your new home and beyond, we’re prepared to go the distance with you.
Fill out the form or give us a call at 425.268.0245 to get started today!
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