Posted January 24, 2024 in Banking Tips
3 Ways to Use Your Home’s Equity in the Coming Year
If you have equity in your home and are looking at home improvements – or even debt consolidation – Security First Bank mortgage lenders are here to help you understand your options.
With the help of our experienced lenders, you may have a variety of options that best fit your situation.
HELOCs (Home Equity Line of Credit)
A Home Equity Line of Credit (HELOC) allows you to borrow against your
home’s equity up to a certain amount. This is a revolving line of credit that you may use periodically, depending on your situation, if the rates and your home’s equity are favorable. Note that unlike a cash-out refinance or a home equity loan, HELOCs typically come at a variable interest rate.
Use your HELOC to consolidate debt, finance home improvement projects, or put toward your educational goals. HELOCs are a good option to use your home’s value to invest in things that will likely gain returns on that investment.
If you have owned your home for a while, you may have the leverage you need for cash-out refinancing. This means you may be able to access cash by replacing a current mortgage with a new loan if the rates make sense for your situation.
You may elect to use your new “closing cash” for home improvements, debt consolidation or other financial needs. It will increase your total loan amount but offers a chance to finance at a lower interest rate.
Home Equity Loans
A home equity loan is essentially a second mortgage that allows you to borrow against your home’s value at a fixed rate you repay over time. The loan amount is based upon the amount you owe and your home’s current market value.
Unlike HELOCs, home equity loans are typically a lump sum at a fixed rate. Like all debt consolidation, refinancing, or loan options, there are pros and cons to each as they relate to you and your financial picture.
It’s Important to Know What’s Best for You
Knowing which option is best for you can be a bit overwhelming. That’s why your Security First Bank mortgage loan officer is here to help you navigate your options.
Market rates may change, but the dependability of your mortgage lender won’t. As you look ahead to 2024 – and beyond – talk to Security First Bank today and know your options and opportunities, in any market.
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