3 Ways to Tap the Equity in Your Home
Ready to tap into the borrowing power of your home equity? Compare your options with a home equity loan, home equity line of credit and home refinance.
With today’s low rates, now may be the perfect time to tap into your home’s equity. As a homeowner, your home equity is your most valuable asset, and one way to put that asset to work is with a home equity loan. Home equity loans are a cost-effective and efficient way of funding home renovations and other important life expenses.
Take Advantage of Your Home Equity
Borrowing against the equity in your home offers some major benefits compared to credit cards and personal loans. Home equity loans offer lower interest rates than credit cards and most other forms of credit, making it a low-cost way to borrow money.
Using a home equity loan to fund home renovations may help increase your property’s value if you plan to sell someday — while also improving your enjoyment of the home if you plan to stay. Paying off unexpected expenses and consolidating debt is another way to use your home equity. You may also want to consider a home equity loan to fund college tuition, or to create unforgettable memories and experiences — such as a wedding or a dream vacation.
3 Options for Home Equity Borrowing
Home equity loans can be structured in a few different ways to meet your needs:
- Home equity line of credit (HELOC).[cite::1402::cite] A HELOC is a credit line with an adjustable rate and interest-only payments for a specified time during which the borrower can access the funds. This option is good for expenses that are paid in installments, such as college tuition. When you borrow with a HELOC, you only pay interest on the money you draw.
- Home equity loan.[cite::1402::cite] A home equity loan allows you to borrow a lump sum to be paid back in monthly installments over a specified period. This option is best for major purchases or one-time expenses, such as a home remodeling project. Most home equity loans have a fixed interest rate for the term of the loan.
- Home refinance loan.[cite::1402::cite] This option replaces your existing mortgage with a new home loan. With a home refinance loan, you can draw on home equity that may be available and use it to spend on home improvements.
If you have questions, Amegy Bank is here to help. Our mortgage bankers can help you assess your home equity and choose the option that best meets your needs.