Leverage Your Home's Equity
As a homeowner, one of your biggest assets is your home’s equity. Equity is the amount of your home that you own outright. This includes the amount you paid in cash up front (your down payment), plus the amount you pay toward your loan balance with your monthly mortgage payments.
For example, if you owe $200,000 on your mortgage and your home is worth $300,000, you have $100,000 in equity.
Many homeowners build up their equity and utilize that as a down payment when it comes time to buy a new house. Others tap into their equity while they still live in the home for things like renovations, debt consolidation, education expenses, and more.
You can access your home's equity a few different ways, including:
With each of these options, you will pay interest – but the rate and type (fixed or variable interest) depends on which loan option you choose. In any case, it can be helpful to learn more about mortgage interest rates and how they are potentially impacted by factors such as the prime rate.
what can I use my home’s equity for?
The funds from a home equity loan can be used for a variety of purposes, but it's important to use them wisely since your home serves as collateral for the loan. Here are some common uses for a home equity loan:
- Home Improvements: Many homeowners use home equity loans to finance renovations or upgrades to their homes. This can include kitchen remodels, bathroom renovations, adding a room, or making energy-efficient improvements.
- Home Repairs: If your home requires urgent repairs, such as a new roof or foundation repairs, a home equity loan can be a practical way to cover these costs.
- Debt Consolidation: You can use a home equity loan to consolidate high-interest debt, such as credit card balances or personal loans. By doing this, you may lower your overall interest rate and simplify your monthly payments.
- Education Expenses: Home equity loans can be used to cover education costs, such as tuition, books, and school-related expenses. This can be a cost-effective way to finance education compared to other borrowing options.
- Emergency Expenses: In case of unexpected medical bills or other financial emergencies, a home equity loan can provide quick access to funds at a lower interest rate than credit cards or personal loans.
home equity financing options
home equity loans
Home equity loans allow homeowners to borrow a lump sum of money based on their equity. This loan type usually has a fixed interest rate and is repaid in regular installments over a specified period. Home equity loans are often referred to as “second mortgages.”
home equity line of credit (HELOCs)
With a HELOC, you’ll be given a credit limit based on your home’s equity, which you can draw from as needed. Unlike a home equity loan, a HELOC typically offers a variable interest rate. Waterstone Mortgage offers a fixed-rate* HELOC option, which allows you to access all funds at closing, then make additional draws throughout the draw period.
cash-out refinance
A cash-out refinance involves taking out a mortgage greater than the remaining balance on your current loan, using your equity as a cash advance. With this option, you will refinance your original mortgage loan into a new loan.
All loan requests are subject to credit approval as well as specific loan program requirements and guidelines. Refinance requests are subject to credit approval as well as specific loan program requirements and guidelines. A Waterstone Mortgage professional can answer your questions and assist you in the application process should you choose to proceed.
*The initial amount funded at origination will be based on a fixed rate; however, this product contains an additional draw feature If the customer elects to make an additional draw, the interest rate for that draw will be set as of the date of the draw and will be based on an Index, which is the prime rate published in the Wall Street Journal for the calendar month preceding the date of the additional draw, plus a fixed margin. Accordingly, the fixed rate for any additional draw may be higher than the fixed rate for the initial draw.
