In our society, a home represents a lot more than just a place to live for you and your family. It’s also a major financial asset, usually the largest one a person ever has.
With the price of groceries and inflation climbing steadily, many people can’t wait until they sell their homes to realize their value. Thankfully, there are ways to leverage your equity before it’s time to sell and move out.
Let’s check out a few ways homeowners can make the most of their investment.
Home Equity Loan
A home equity loan lets the borrower use the equity in their home as collateral, so they get better borrowing terms than they’d get otherwise. The amount you can borrow is determined by the property’s current market value, as appraised by an independent assessor.
The longer you’ve owned the home, the more equity in it you’ve built up, which can be used towards your financial goals. Home equity loans from Burke Financial and other leading mortgage brokers help people of all credit, debt, and income levels meet their financial obligations flexibly, even if they’ve been denied a loan from the bank.
A home equity loan is excellent for milestone purchases, like a new car, a big trip, or a home renovation. They’re especially great when the amount you need is a fixed sum, not open-ended.
HELOC (Home Equity Line of Credit)
A HELOC is like a home equity loan, except the borrower can access a revolving line of credit, rather than just one lump sum. If you need to buy, say, a car, you know at the time how much it will cost. But if you’re redoing the kitchen or adding another room to your home, the total may rise or fall with time.
Typically, HELOCs are amazing ways to take advantage of the equity you’ve built in your home, but you need to be careful. Because you’re using your home as collateral, failure to repay this loan could result in losing your home.
That’s why using a HELOC to invest in your home is so efficient: the borrowed money will make the overall investment more valuable, so if you do it wisely and carefully, there’s a path where it can pay for itself.
To some people, the phrase “second mortgage” conjures up stressful feelings of being cornered financially. Actually, a second mortgage can be an effective method for debt consolidation or to help you tap a valuable resource when you really need it.
Second mortgages, like the above two options, let you access money quickly because the approval process doesn’t usually take long. Speak to a professional mortgage lender to see if a second mortgage is right for you. They’ll help you get great terms or recommend another path that suits your situation better.
The price of essentials is rising quickly, as are the costs of borrowing money. If you’re a homeowner looking to make ends meet, connect with a mortgage broker near you to learn about your options.